THE WORLD BANK Intellectual Property Rights · 2016-07-15 · REPORT NO. 35517-GLB Intellectual Property Rights Designing Regimes to Support Plant Breeding in Developing Countries

REPORT NO. 35517-GLB

Intellectual Property RightsDesigning Regimes to Support Plant Breeding in Developing Countries

Agriculture and Rural Development Department

THE WORLD BANK

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THE WORLD BANK

Intellectual Property Rights Designing Regimes to Support Plant Breeding in Developing Countries

THE WORLD BANK

AGRICULTURE AND RURAL DEVELOPMENT DEPARTMENT

© 2006 The International Bank for Reconstruction and Development / The World Bank1818 H Street, NWWashington, DC 20433Telephone 202-473-1000Internet www.worldbank.org/ruralE-mail [email protected]

All rights reserved.

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A C R O N Y M S A N D A B B R E V I AT I O N S vii

E X E C U T I V E S U M M A RY xiii

A C K N O W L E D G M E N T S xi

Introduction 1The Strengthening of IPRs 1IPRs in Plant Breeding 2IPRs as a Policy Issue 3The Origins of This Report 3The Structure of This Report 4

IPRs and Plant Breeding 5The Protection of Plants and Varieties 5Additional Strategies That Protect the Plant Breeder 7

Plant Breeding and Seed Sectors in Developing Countries 11Seed Systems in Industrialized Countries 11Seed Systems in Developing Countries 12Research and Plant Breeding 12Seed Production and Marketing 12Seed Use 13Seed Policies and Regulations 13

IPR Legislation and Management for Plant Breeding 15The Current Status of PVP in Developing Countries 15The Scope of PVP in Developing Countries 20The Administration of PVP 22Patents 24

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Contents

Impacts of IPRs on Seed Companies 27PVP and Private Seed Production in Developing Countries 27The Use of Other Methods of Protection 30Protecting Biotechnology 32

Impacts of IPRs on Public Sector Plant Breeding and Seed Production 35

Intellectual Property Policies in NARIs 35Revenue Generation Strategies 36Enforcement 38Public Seed Production 40NARI Plant Breeding Priorities and Strategies 40Impact on IARCs 41

Lessons 45Challenges for National Policy Makers 50Challenges for Trade Negotiators 50Challenges for Research Managers in Public Institutions 51Challenges for Farmers and Their Associations 50Potential Role for the World Bank 53

R E F E R E N C E S 57

Appendix A. Patents on Biotechnologies 61

Appendix B. The Breeding and Seed Sectors in the Case Study Countries 65

Appendix C. Major Issues in Current IPR Systems for Plant Varieties 73

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iv Contents

Contents v

Tables2.1 Comparison of Major Intellectual Property Systems for Plant Varieties 73.1 Costs (US$) of Variety Release in Case Study Countries 134.1 Numbers of PVP Applications and Certificates Issued

in Case Study Countries 194.2 Sources of Applications for PVP in China and Kenya 204.3 Costs (US$) of PVP Applications and Maintenance 227.1 Key Parameters in the Design of a PVP System 48B.1 Variety Release in the Case Study Countries 66B.2 PVP Legislation in the Case Study Countries 71B.3 Seed Use for Major Field Crops in the Case Study Countries 72

Figures1.1 International Agreements that Affect Plant Breeding 2

Boxes1.1 Countries Included in the Study 42.1 MTAs and the Seed Industry 94.1 Developing Country Responses to TRIPS 164.2 Differential Treatment of Extant Varieties 184.3 Farmers’ Rights and PVP 214.4 Determining PVP Application and Renewal Fees 234.5 Experience in Patenting for Plant Breeding and Biotechnology 255.1 Early Evidence of the Impact of PVP 285.2 Protecting Biotechnology: Roundup-Ready Soybean 325.3 Protecting Biotechnology: Bt Cotton 336.1 Licensing Public Varieties 376.2 NARI Seed Production Units 396.3 The Latin American Fund for Irrigated Rice 436.4 Millet and Sorghum Commercialized through ICRISAT 436.5 IPRs for Striga Resistance in Maize 44C.1 Breeder’s Exemption and the Patent System 74

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AATF African Agricultural Technology Foundation

AFLP Amplified fragment length polymorphism

AICCIP All-India Coordinated Crop Improvement Programs

ARIPO African Regional Intellectual Property Organization

BIOEARN Eastern Africa Regional Network on Biotechnology

BRI Biotechnology Research Institute (China)

Bt Bacillus thuringiensis

CAAS Chinese Academy of Agricultural Sciences

CBD Convention on Biological Diversity

CEO Chief Executive Officer

CGIAR Consultative Group on International Agricultural Research

CIAT Centro Internacional de Agricultura Tropical (International Center for TropicalAgriculture)

CICR Central Institute for Cotton Research (India)

CIMMYT Centro Internacional de Mejoramiento de Maíz y Trigo (International Maizeand Wheat Improvement Center)

CORPOICA Corporación Colombiana de Investigación Agropecuaria (ColombianCorporation for Agricultural Research)

CRI Cotton Research Institute (China)

DNA Deoxyribonucleic acid

DPL Delta and Pineland

DUS Distinctness, uniformity, stability

EDV Essentially derived variety

Embrapa Empresa Brasileira de Pesquisa Agropecuária (Brazilian Agricultural ResearchCorporation)

EPO European Patent Office

EU European Union

FAO Food and Agriculture Organization of the United Nations

FEDEARROZ Federación Nacional de Arroceros (National Federation of Rice Producers)(Colombia)

FLAR Fondo Latinoamericano para Arroz de Riego (Latin American Fund forIrrigated Rice)

Acronyms andAbbreviations

FtO Freedom to operate

GDP Gross domestic product

IARC International Agricultural Research Center

ICA Instituto Colombiano Agropecuario (Colombian Institute for Agricultureand Livestock)

ICAR Indian Council of Agricultural Research

ICRISAT International Crops Research Institute for the Semi-Arid Tropics

INASE Instituto Nacional de Semillas (National Seed Institute) (Argentina)

IPR Intellectual property right

IR Imidazolinone resistant

IRRI International Rice Research Institute

IT PGRFA International Treaty for Plant Genetic Resources for Food andAgriculture

IVF Institute for Vegetables and Flowers (China)

KARI Kenya Agricultural Research Institute

KEPHIS Kenya Plant Health Inspectorate Service

KIPI Kenya Intellectual Property Institute

KSC Kenya Seed Company

MAS Marker assisted selection

MNC Multinational corporation

MoA Ministry of Agriculture

MTA Material transfer agreement

NARI National agricultural research institute (generic)

NARO National Agricultural Research Organization (Uganda)

NBPGR National Bureau for Plant Genetic Resources (India)

NBRI National Botanical Research Institute (India)

NGO Nongovernmental organization

NPTs National Performance Trials (Kenya)

NSCS National Seed Certification Service (Uganda)

OAPI African Organization for Intellectual Property

OECD Organization for Economic Cooperation and Development

OPV Open-pollinated variety (as opposed to hybrid – in this report used forboth normally out-crossing and self-fertilizing crops)

PCT Patent Cooperation Treaty

PBR Plant Breeders’ Rights

PIPRA Public Intellectual Property in Agriculture

PMA Plan for the Modernization of Agriculture (Uganda)

PVP Plant variety protection

RAPD Random amplified polymorphic DNA

RFLP Restriction fragment length polymorphism

viii Acronyms and Abbreviations

Acronyms and Abbreviations ix

PCR Polymerase chain reaction

RR Roundup Ready

SADC Southern African Development Community

SIPO State Intellectual Property Office (China)

SPLT Substantive Patent Law Treaty

TRIPS (WTO Agreement on) Trade Related Aspects of Intellectual PropertyRights

UPOV International Union for the Protection of New Varieties of Plants

USA United States of America

USPTO U.S. Patent and Trademark Office

V-GURT Genetic use restriction technology operating at variety level

WIPO World Intellectual Property Organization

WTO World Trade Organization

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This report was prepared by Rob Tripp (ODI), Derek Eaton, and NielsLouwaars (Wageningen University, NL) under the overall supervi-sion of Eija Pehu (Task Team Leader) and Riikka Rajalahti (ARD).

The task team would like to extend thanks to Willem Janssen(SAR) and Indira Ekanayake (LCR) for their helpful comments onthe manuscript. The team would also like to thank Jonathan Agwe(ARD), Kym Anderson (DEC), Carlos Braga (PRMTR), Charles DiLeva (LEGEN), Danielle Malik (LEGEN), Berhane Manna (AFR),Gayane Minasyan (EAP), David Nielson (AFR), Sari Soderstrom(EAP), Carl Pray (Rutgers University), and Michael Halewood(IPRGI) for their comments and suggestions during the preparationof this report.

The task team thanks Kevin Cleaver (Director, ARD) and SushmaGanguly (Sector Manager, ARD) and the ARD ManagementCommittee for their support and guidance. The team acknowledgesKelly Cassaday for editing and formatting the report, and MelissaWilliams and Marisa Baldwin for their help with the logistics andproduction of the report.

Acknowledgments

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Increased attention has been given in the past few years to strength-ening intellectual property rights (IPRs) in plant breeding. Thenumber of countries that grant such rights has grown, the types ofinventions that can be protected have expanded, and the scope ofprotection offered by extant IPR systems in different countries hasalso broadened. The Agreement on Trade Related Aspects ofIntellectual Property Rights (TRIPS 1993) of the World TradeOrganization (WTO) requires all WTO members to introduce atleast a minimum level of protection in their national laws for plantvarieties and inventions in biotechnology. Least DevelopedCountries recently managed to extend the deadline to 2013 forbringing their national IPR laws fully up to the TRIPS standards.Even so, this extension does not diminish the pressure to developIPR legislation for plant varieties in several countries, because bilat-eral trade negotiations between developing countries and the USAor EU often include requirements that go beyond the TRIPS require-ments (the so-called “TRIPS-plus” requirements). These develop-ments towards strengthened IPRs arise from a trade perspectiverather than from a perspective of increasing innovation in the devel-oping countries concerned.

The TRIPS agreement is not the only international agreementrelated to regulatory systems affecting plant breeding. Othersinclude the Convention on Biological Diversity, the InternationalTreaty on Plant Genetic Resources for Food and Agriculture, and thediscussions in the Intergovernmental Committee on IntellectualProperty and Genetic Resources, Traditional Knowledge, andFolklore of the World Intellectual Property Organization (WIPO). Inaddition, the development of a Substantive Patent Law Treaty(SPLT) as discussed within WIPO is likely to reduce the current flex-ibility to protect plant varieties (Wallø Tvet 2005). This report con-centrates on the requirements arising from the TRIPS Agreementand IPR-related trade discussions, and it refers to the other agree-ments only when they relate directly to IPRs.

Plant breeding research and seed provision are vital industriesthat need to be fostered and stimulated. Plant breeding is importantfor food security at the local and global levels; the ability of adaptedvarieties to cope with environmental stresses contributes to strate-gies for sustainable agriculture, and the provision of productiveoptions for commercial farming is essential for wider economicdevelopment. The twin challenges are first to understand the degree

Executive Summary

to which stronger IPRs in plant breeding can helpstimulate these industries and second to deter-mine whether the IPR systems for plant varietiesthat have been developed in industrialized coun-tries can contribute to development objectives.

This report is based on a field study of theimpact of strengthened IPRs on the breedingindustries in China, Colombia, India, Kenya, andUganda. The analysis also makes use of secondarydata and interviews with stakeholders from othercountries.

IPRs AND PLANT BREEDINGAlthough a range of attempts have been made toprovide some type of IPRs for plant varieties, onlywithin the last several decades has a mechanismfor plant variety protection (PVP) firmly takenhold in industrialized countries. The UPOV(International Union for the Protection of NewVarieties of Plants) Conventions provide the mostwidespread model for PVP, and most countries ofthe Organization for Economic Cooperation andDevelopment and a growing number of develop-ing countries have implemented legislation com-patible with one of these Conventions. However,UPOV is not the only possible option for design-ing a PVP system, and even within the UPOVConventions there is a fair degree of flexibility thatdeveloping countries must appreciate and takeadvantage of if they are to design IPR regimes forplant breeding that meet their specific conditionsand priorities. Of particular importance are issuesrelated to farmer seed saving and exchange andissues concerning access to protected varieties forfurther research and development.

Increasingly, IPR regimes for plant breedinginclude attention to patent systems, particularly forbiotechnology. Most of the genes and tools used inthe development of transgenic crops are patented.Even many of the diagnostic and selection pro-cesses used in conventional plant breeding arepatented, and their protection has implications forresearchers’ ability to use these tools and releasevarieties developed through these techniques.Developing countries still have relatively limitedexperience in managing patents for biotechnology.

It is also important not to lose sight of the factthat other mechanisms can protect the rights ofplant breeders and seed producers and provideincentives for commercial seed system develop-ment, even in the absence of IPRs. Among the

more important examples are biological (hybridtechnology), regulatory (seed law and, morerecently, biosafety law), legal (contract law), andcommercial (business practices) mechanisms.

PLANT BREEDING ANDSEED SECTORS INDEVELOPING COUNTRIESUntil fairly recently in most developing countries,seed was supplied through the public sector.Recent private sector involvement has been afunction of policy change. Any assessment of thespecific impact of IPR regimes on seed industryperformance and investment must be seen in thecontext of these wider changes in the commercialand policy environment. In the majority of devel-oping countries, most of the plant breeding andsome seed production still depend on the publicsector, particularly national agricultural researchinstitutes (NARIs), often supported by interna-tional agricultural research centers (IARCs).

Plant breeding and seed production are alreadysubject to a set of national regulations on varietyrelease and seed quality control. These regulationshave played an important part in determining thecurrent evolution of seed systems in developingcountries. Recently established IPR systems in theseed sector are meant to act in concert with con-ventional seed regulations, and in some cases theyare the impetus for further changes in nationalseed regulations.

IPR LEGISLATION ANDMANAGEMENT FORPLANT BREEDINGRelatively few developing countries have any sig-nificant experience with protecting varieties. Thepreliminary evidence indicates that the applica-tion of PVP in these countries tends to reinforcemajor domestic trends in the development of com-mercial seed systems rather than to open majornew avenues or opportunities. In systems wherethere is heavy emphasis on hybrid varieties andconsiderable commercial competition, such asthose in China and India, most interest centers onPVP for parent lines and hybrids. Where a marketin commercial open-pollinated varieties (OPVs)is already established, the PVP system provideswelcome additional protection for those markets.

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Executive Summary xv

In some cases in which a domestic seed industry isjust emerging, companies may not feel it is worth-while to take advantage of PVP. In countrieswhere the production of ornamental plant materi-als is important, these materials dominate PVPapplications.

Even though developing countries have rela-tively little experience with PVP, the systems thatare in place demonstrate a fairly wide range ofapproaches to issues such as seed saving, therange of crops and varieties eligible for protection,and the treatment of Farmers’ Rights. The casestudies also indicate that many issues concerningthe administration of PVP in developing countriesremain to be addressed. For example, establishingfacilities and providing staff to test varieties fordistinctness, uniformity, and stability (DUS) repre-sents a significant investment. No comprehensiveguidance exists on how to set charges for PVP, andit is likely that current fee rates do not provide anoptimal set of incentives for national plant breed-ing industries. There is also little experience withthe enforcement of PVP.

IMPACTS OF IPRs ONSEED COMPANIESThe literature analyzing the impact of IPRs onplant breeding in the North provides only patchyevidence that PVP regimes have a significantinfluence on the size or nature of investments inthe commercial seed sector. Thus it should not besurprising that it is difficult to document manyinstances in which a developing country’sinvolvement with PVP has led to marked changesin direction for its domestic seed industry. Oneproblem in looking for such relationships is thefact that the commercial seed sector in most devel-oping countries is undergoing significant changebecause of government liberalization policies,making it difficult to attribute any changes to theestablishment of an IPR regime.

Nevertheless, it is possible to demonstratesome positive contributions from recently estab-lished PVP systems in developing countries.Where domestic seed companies produce OPVsfor commercial farmers, PVP helps stabilize theindustry and protect companies from their com-petitors. Where parental lines of commercialhybrids are subject to misappropriation, PVP pro-vides additional protection and makes companies

more confident about their research investments.A PVP system may also make foreign seed com-panies more confident in sharing varieties withdomestic partners. Even so, commercial seedindustries have developed in the absence of IPRs(other than trademarks) in several countries,including India and Uganda. In the near future,PVP can be expected to have only a modestimpact on the direction of domestic commercialseed markets, given that most PVP systems indeveloping countries cannot control farmer seedsaving and possess very limited enforcementcapabilities (because of inadequacies in legal sys-tems, insufficient regulatory staff, and insufficientexperience in the companies themselves).

The protection of transgenic crops has provenparticularly difficult in developing countries.Most experience with transgenic crops revolvesaround Roundup-Ready soybean and Bt (Bacillusthuringiensis) cotton and shows that the presenceof IPR systems is not necessarily correlated withthe effectiveness of controlling access to seed oftransgenic varieties. Indeed, the most effectivecontrol has been achieved through contracts incontrolled output markets and the application ofseed and biosafety regulations. The experiencewith transgenic crops emphasizes the importanceof learning how to use a judicious combination ofseed regulation, biosafety, and IPRs to provide areasonable degree of protection to the providers oftransgenic technology.

IMPACTS OF IPRs ON PUBLICSECTOR PLANT BREEDING ANDSEED PRODUCTIONThe advent of IPRs for plant breeding has signifi-cant implications for public sector plant breedingin developing countries, yet very few NARIs havewell-developed IPR policies or staff that are capa-ble of dealing with these complex issues. One ofthe principal attractions of IPRs for NARIs is thepossibility of using them to raise revenues, espe-cially when NARIs increasingly are expected togenerate a portion of their income. However, thereare concerns about whether NARIs that focus onearning royalties can compete effectively (for staffand market share) with private sector plant breed-ing. There is also concern over how the focus onrevenue will affect NARIs’ public task. SomeNARIs are beginning to apply for patents on some

of their innovations. The added revenue raisesimportant administrative challenges about thedivision of royalty income within the NARI toreward innovators sufficiently while maintainingincentives for research that is less likely to be pro-tected. The NARIs also need to know how to nego-tiate access to protected technologies and how tomake the best use of their own innovations in thebargaining process.

The IARCs all have IPR policies, although mostof these are still subject to adjustment and elabora-tion. The increased use of IPRs has caused IARCsto reevaluate their modes of interaction with bothNARIs and seed companies. Varied approacheshave been taken to ensure that NARI germplasmreaches the farmers for whom it is intended.Although IARCs make use of many protectedtechnologies, they have very limited experience inassessing their freedom to operate or in knowinghow and when to pursue patent protection forparticular inventions.

LESSONSIPRs should not be considered a silver bullet forcommercial seed industry development. Becauseseed systems differ widely among countries andalso within countries, between crops, and acrossregions, blueprint advice cannot be given to policymakers on how to design the ideal IPR system forplant breeding. Rights that are excessively broadin scope may obstruct the flow of technologies toresource-poor countries and farmers. On the otherhand, IPRs may contribute to the development ofcommercial seed systems in certain sectors, andthey may assist in the creation of effective public-private partnerships. This outcome will material-ize, however, only when other conditions forbusiness development are favorable.

Pressure to strengthen IPRs in plant breeding indeveloping countries presents both immediateand long-term challenges to policy makers anddonors. The immediate challenges are related toframing and implementing appropriate legislationthat is consistent with TRIPS and that supportsnational agricultural development goals. Thelonger-term challenges are derived from the factthat an IPR regime, on its own, is not likely to pro-vide the incentives that elicit the emergence of arobust plant breeding and seed sector; attention toother institutions and the provision of an enablingenvironment are also necessary.

National policy makers must give immediateattention to the establishment and implementationof appropriate IPR legislation for plant breeding.Several sui generis models are available, includingthe UPOV Conventions, but even reliance on amodel requires a number of choices. The mostimportant parameters to determine are related toseed saving, seed exchange, the scope of protec-tion, the breadth of coverage, and the relation ofPVP and patents to the concerns of Farmers’Rights. These parameters deserve careful consid-eration before a decision is made on the use of aparticular model for national legislation. Policymakers must also consider cost-effective meansfor implementing an IPR regime and ensuring thatthe IPR system is consistent with enforcementcapabilities.

If they are to have their intended effect, IPR sys-tems in plant breeding must be tailored to the con-ditions of national seed systems. Even within asingle country, the requirements and conditions ofdifferent crop production systems are not uniform,and countries may consider legal options thataddress this variability. For example, strong pro-tection may be provided for export agricultureand weak or no protection for noncommercial sec-tors that primarily cater for subsistence farmers.The absence of commercial incentives in noncom-mercial sectors, however, creates a (continued)responsibility for public investments in plantbreeding and seed support systems.

Systems for PVP contain flexibility to balancebenefits for breeders and farmers—a flexibilitythat is much more difficult to create within patentsystems. Some patent systems have created open-ings for flexibility, however, either by excludingcertain inventions from patentability or certainclaims from being honored, or by providingexplicit exemptions when protection may undulyaffect farmers.

Developing IPRs for biotechnology in plantbreeding requires greater attention to strengthen-ing capacities in national patent offices. Countriesthat use transgenic varieties will need to ensureadequate protection, although in many cases cred-ible enforcement of the right combination ofbiosafety regulations, seed laws, and PVP mayoffer adequate protection for transgenic varieties,at least in the early stages of their availability indeveloping countries.

Policy makers must recognize that the develop-ment of a commercial seed sector depends on

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Executive Summary xvii

attention to other factors in the enabling environ-ment, including seed regulations and the growthof agribusiness. Particular attention is also neededto ensure that policies encourage NARIs to fulfilltheir public sector mandate while taking advan-tage of IPRs to gain access to technology, guide thediffusion of their varieties, and, where appropri-ate, earn royalties.

The World Bank can assist developing countriesby providing immediate support to national effortsat developing and implementing PVP legislation aswell as by instituting longer-term strategies that fos-ter the development of seed sector institutions. Inthe short term, the Bank can support opportunitiesfor national (or, where relevant, regional) forumsthat promote debate and discussion about the shapeof PVP legislation and its implementation.Discussions should emphasize (1) the necessity ofstructuring IPR regimes to evolve in concert withnational seed systems, including the possibility ofproviding different levels of protection to differentcrops, and (2) the importance of key parameterswithin IPR models. The Bank can also sponsor

meetings and other activities that explore possibili-ties for regional collaboration in the administrationand management of PVP, and it can encouragestronger regional mechanisms for patent applica-tions, including those in biotechnology. In addition,the World Bank can support further research thatmonitors experience with IPRs in developing coun-tries and that examines issues related to the cost-effective management of IPR regimes.

There are also longer-term opportunities forthe Bank to support the growth of seed sectorinstitutions. Capacity building in national PVPand patent offices, as well as support for effectiveseed regulatory regimes, will be useful. Capacitybuilding for regional collaboration is needed inboth the IPR and seed regulatory domains. Bank-supported agribusiness projects should includereviews of IPR regimes and their implications forproject success. World Bank support for NARIsshould help develop adequate IPR policies andstrategies, encourage more effective interactionwith the private seed sector, and build competencein accessing protected technology.

1

THE STRENGTHENING OF IPRsThe past few years have seen increased attention to the strengthen-ing of intellectual property rights (IPRs) in plant breeding. The num-ber of countries that grant such rights has grown, the types ofinventions that can be protected have expanded, and the scope ofprotection offered by extant IPR systems in different countries hasbroadened as well. The Agreement on Trade Related Aspects ofIntellectual Property Rights (TRIPS 1993) of the World TradeOrganization (WTO) dramatically changed the importance of IPRs indeveloping countries by requiring all WTO members to introduce atleast a minimum level of protection of intellectual property in theirnational laws. Article 27.3(b) of the TRIPS Agreement asks all mem-bers to provide some form of protection for plant varieties. Patentprotection needs to be available for all other inventions, includingthose in plant biotechnology.

The nature and scope of IPRs for genetic resources, including plantvarieties, are also discussed in the frameworks of the Convention onBiological Diversity (CBD) and the International Treaty on PlantGenetic Resources for Food and Agriculture (IT PGRFA), which en-tered into force in 1993 and 2004, respectively. Additional pressure toprotect plant varieties in developing countries (beyond the minimumrequirements of TRIPS) is being exerted in bilateral trade negotiationsbetween developing countries and the USA or EU. The importance ofIPRs for plant breeding and the seed industry has been further en-hanced by the development of plant biotechnology, which not onlyhas engendered patents for the genes, tools, and processes that are anincreasingly common part of modern plant breeding but has spurredthe introduction of utility patents for plant varieties and hybrids insome countries.

IPRs are just one set of regulations based on international agree-ments that impact plant breeding and seed production. Althoughother international agreements influence plant breeding and seed pro-duction (figure 1.1), such as agreements over rights to traditional knowl-edge or national sovereignty over plant genetic resources, this reportconcentrates on the introduction of IPRs in developing countries as a re-sult of the TRIPS Agreement. It refers to aspects of other agreements andorganizations only when they are important to the discussion.

Systems for IPRs have been recognized for more than a century,yet until recently IPRs have not been an issue in the plant breedingand seed sector in most developing countries. Although IPR regimes

Introduction1

for agricultural inventions have been used widelyin industrialized countries for decades, most de-veloping countries are in the early stages of imple-menting and/or enforcing IPRs related to plantvarieties. The use of IPRs in plant breeding indeveloping countries raises a number of importantissues, including smallholders’ access to technol-ogy, the role of public agricultural research, thegrowth of the domestic private seed sector, the sta-tus of farmer-developed varieties, and the growingNorth-South technology divide that restricts accessto plant germplasm and research tools. Since accessto seed and new crop varieties is fundamental foragricultural development and rural welfare, it isimportant to understand the impact of these legalsystems on the breeding and seed sectors in devel-oping countries.

IPRs IN PLANT BREEDINGConventional IPRs protect printed text, inventions,industrial designs, trademarks, geographical indi-cations, and trade secrets, all of which have differ-ent regimes for registration, scope, and duration ofprotection. Since none of these property rights isconsidered adequate for certain other sectors,additional, so-called “sui generis” systems havebeen developed for the protection of integrated

computer circuits, databases, and plant varieties(Plant Breeders’ Rights). Plant varieties presentseveral important challenges for an IPR system.First, they are biological products that are easily re-produced and whose very use entails multiplica-tion. Second, the users (and potential “copiers”) ofthe technology are millions of individual farmerswhose compliance with any protection regime isdifficult and expensive to monitor. Third, the agri-cultural sector involves cultural values and foodsecurity and, in many countries, affects the liveli-hoods of the rural poor, making the imposition ofany controls a sensitive political issue. Fourth, theinherent diversity of plant varieties makes it diffi-cult to apply the narrow technical criteria of nov-elty and reproducibility used in the conventionalpatent system, whereas the use of standard breed-ing methodologies may frustrate the applicationof the “inventive step” criterion. Finally, the devel-opment of new plant varieties has always relied tosome extent on public research, partly in responseto the traditional public good nature of cropgermplasm, and the application of IPRs to theproducts of a publicly funded endeavor can beproblematic.

The advent of modern biotechnology has broughtadditional challenges for the application of IPRs inplant breeding. Not only do some countries allow

2 Intellectual Property Rights

Figure 1.1 International Agreements that affect Plant Breeding

Convention on Biological Diversity

(CBD)

World TradeOrganization

(WTO)

World Intellectual Property Organization

(WIPO)

Food and AgricultureOrganization of the

United Nations(FAO)

Access andbenefit sharing

CartagenaProtocol

Trade RelatedAspects ofIntellectual

Property Rights(TRIPS)

PatentCooperationTreaty (PCT),

Substantive PatentLaw Treaty (SPLT)

IntergovernmentalCommittee on

IntellectualProperty and

GeneticResources,Traditional

Knowledge, andFolklore

InternationalTreaty on Plant

Genetic Resourcesfor Food andAgriculture(IT PGRFA)

Geneticresources

Living modifiedorganisms

Breeder’s rights,patents,

trademarks, tradesecrets

Harmonizationof IPRs

Traditionalknowledge,

genetic resources,folklore

Facilitatedaccess, Farmers’

Rights

Source: Authors.

Breeders

Introduction 3

the use of patents to protect plants, varieties, andgenes, but the majority of the tools and processes ofmolecular biology and genetic transformation canbe patented as well (Appendix A). Many of the tech-niques of biotechnology, which are an increasinglyimportant part of conventional plant breeding, arealso protected, raising implications for the owner-ship of any variety resulting from such research.Finally, because biotechnology allows a much moreprecise understanding of the genetic makeup of anycrop variety, it opens the door to sophisticatedscreening and reverse engineering techniques,which in turn offer new possibilities for utilizingprotected varieties, leading to pressure for morestringent protection.

IPRs AS A POLICY ISSUEPlant breeding research and seed provision arevital industries that need to be fostered and stimu-lated. Plant breeding is important for food securityat the local and global levels. The ability of adaptedvarieties to cope with environmental stresses con-tributes to strategies for sustainable agriculture,and the provision of productive options for com-mercial farming is essential for wider economicdevelopment. IPR regimes for plant breeding canplay a part in agricultural development, but thechallenge is to strike the right balance betweenincentives for innovation and access to productiveresources. An IPR regime in plant breeding shouldperform two basic roles. First, in the interest of thepublic, the IPR regime should ensure that knowl-edge and materials enter the public domain at somepoint, and it should stimulate improvements andinnovations that increase the choices available tofarmers and consumers. Second, in the interest ofthe rights holder, the IPR regime should provideopportunities for breeders to recoup their invest-ments, which may include the rights:

• to keep farmers from saving seed of the pro-tected variety, sharing the seed with neigh-bors, or engaging in informal sale of the seed;

• to keep competing commercial seed produc-ers from multiplying and marketing theprotected variety without a license; and

• to keep competing plant breeders from usinga protected variety or technology in thedevelopment of a new variety.

The role of IPRs in agriculture is an exceptionallycontroversial subject. The debates involve complex

arguments defended by a range of interest groups.The optimum design of IPR regimes will vary ac-cording to local economic, institutional, and agri-cultural circumstances and will change as thesedetermining conditions evolve. It is unrealistic tobelieve that there are any simple, uniform, or per-manent formulas that will provide ready-made so-lutions. It is important to recall that IPR regimes arerights and privileges that are granted at the na-tional level in order to contribute to the publicgood. It is therefore the responsibility of policymakers to define the particular societal goals thatIPRs in agriculture are meant to address and to de-velop appropriate legislation.

THE ORIGINS OF THIS REPORTThis report is based on an empirical analysis of theconduct and performance of IPR regimes for plantbreeding in developing countries. It attempts todraw useful lessons to guide national policy makersand donors who are concerned with establishing ef-fective and relevant IPR systems. This report isbased on a study that was commissioned by theWorld Bank in late 2003 and carried out in 2004. Thepreliminary results and conclusions were discussedwith World Bank staff and specialists in agriculturalIPRs in November 2004, and a summary of thestudy has been published (Louwaars et al. 2005).

Because relatively few developing countrieshave experience with IPRs in plant breeding, andbecause an assessment of that experience requiresin-depth fieldwork, a wide range of evidence hadto be sought in a small number of developing coun-tries that have started implementing IPR regimes inagriculture. The five countries chosen for case stud-ies represent major segments of developing coun-try agriculture, geographical spread, and levels ofexperience with IPRs (box 1.1).

A team of nine researchers from Europe and thecase study countries worked on the study. They re-viewed the literature and developed interview pro-tocols for the case study countries to obtaincomparable sets of data. Interviews were con-ducted with large numbers of stakeholders in eachcountry, representing public plant breeding andseed production, the private seed sector, IPR andregulatory agencies, and farmers and farmergroups. Data and reports were also collected andanalyzed, and interviews were conducted withrepresentatives of the commercial seed sector in in-dustrialized countries.

The present document summarizes the findingsfrom the study, includes relevant informationfrom other developing countries, and drawslessons for policy makers who are concerned withdesigning and operating appropriate IPR regimesfor their countries.

THE STRUCTURE OF THIS REPORTFollowing this brief opening chapter, Chapter 2introduces the major examples of IPR regimesfor plant breeding, focusing on plant variety pro-tection (PVP) and patents, and discusses other

mechanisms that provide similar incentives forthe breeding industry. Chapter 3 reviews the in-stitutional setting for seed system developmentin developing countries. Chapter 4 examines theestablishment and management of IPR regimesin plant breeding in developing countries.Chapter 5 reviews the impacts of IPR regimes onseed companies, and Chapter 6 examines theireffects on public research in developing coun-tries. The final chapter presents a set of lessonsfor policy makers and donors who are responsi-ble for guiding the establishment of IPRs forplant breeding.


Box 1.1 Countries Included in the Study

Source: Authors.

China is among the most important agriculturaleconomies in the world and has experience in imple-menting most relevant IPR systems over the pastseveral years. It has a substantial domestic capacity inplant breeding and biotechnology. The seed industryis developing rapidly through private investment(local and foreign) and through the commercializa-tion of a large number of public research and seedenterprises at the national, provincial, and prefecturallevels. China is a market that attracts investors andinventors from all over the world. The country alsohas a significant area planted to transgenic crops.

Colombia is one of the Latin American countries withthe most experience with IPRs in the breeding andseed sectors. It has a diverse agriculture, ranging fromsubsistence farming to several important agriculturalexports, and an emerging use of transgenic crops.Different crops attract different seed productionsystems, with local companies investing in a numberof food crops and multinational investments in cotton,maize, and flower seed production.

India has a very well developed agricultural researchcapacity in breeding and biotechnology, and its largemarket attracts considerable interest from abroad. Ithas a thriving private seed sector, with many small-and medium-scale local companies and a number ofjoint ventures with multinationals, existing alongsidean extensive public seed production and research

infrastructure. India’s approach to agricultural IPRshas resulted in recently enacted legislation that has anumber of unique characteristics and is the productof prolonged and wide-ranging public debate.

Kenya is the Sub-Saharan African country with thelongest experience with IPRs in the breeding and seedsector after South Africa. Its very diverse agricultureranges from subsistence to export sectors, and Kenyamaintains a relatively open policy towards biotechnol-ogy. Its national seed company faces growing competi-tion from local and foreign companies. Thehorticultural industry—encompassing both flower andvegetable crops—established the presence of foreignproviders of planting materials and seed in the country.

Uganda does not yet have an operational IPR systemin the breeding and seed sector, but it has a diversify-ing commercial agricultural sector. It may be consid-ered a representative of the large number ofdeveloping countries that are still in the process ofestablishing an IPR regime. Its public seed enterprisehas been privatized and is losing market share toemerging private seed companies. Seed production offield crops for export is emerging, as is the flowerindustry, which depends on Kenya-based suppliersof planting materials.

More detailed information on the seed systems ofthese countries is presented in Appendix B.

5

Various attempts have been made to establish IPR systems for plantvarieties, but the concept of PVP and the possibility of plant patentsemerged just under a century ago. This chapter summarizes the his-torical development of IPR systems for plant varieties and looks at themajor factors that distinguish them from other intellectual propertysystems. More detailed information can be found in Appendix C.Although the patent system has been in operation for a much longertime, it still must be adjusted to the field of plant biotechnology sothat appropriate and equitable incentives become available. Thischapter outlines some of the major areas of concern, especially in re-lation to supporting agricultural production in developing countries.The discussion emphasizes that formal IPR regimes are not the onlymethod for protecting the interests of plant breeders and seed pro-ducers, and it reviews some of the major alternatives.

THE PROTECTION OF PLANTS AND VARIETIESThe evolution of IPRs for plant varieties

Almost from the beginning of modern plant breeding, there havebeen arguments for establishing some mechanism to reward the cre-ativity inherent in new crop varieties and to establish plant breeder’srights. European efforts eventually culminated in the Convention forthe Protection of New Varieties of Plants (Paris, 1961), which also es-tablished UPOV (the Union for the Protection of New Varieties ofPlants) to support the implementation of the harmonized systemand to expand it to more crops and countries. UPOV provides pro-tocols for assessing and describing the unique characteristics of anew variety, ensuring that it is distinct, uniform, and stable (DUS).These standards are adapted to the mode of reproduction of the pro-tected species: cross-fertilizing crops admit a wider tolerance thanthe relatively strict requirements for uniformity in vegetativelypropagated crops. Any variety that fulfills the DUS criteria and thatis “new” (in the market) is eligible for protection, and there is noneed to demonstrate an inventive step or industrial application, asrequired under a patent regime. A DUS examination involves grow-ing the candidate variety together with the most similar varieties ofcommon knowledge, usually for at least two seasons, and recordinga comprehensive set of morphological (and in some cases agro-nomic) descriptors.

IPRs and Plant Breeding2

The UPOV system—revised in 1972, 1978, and1991—has gradually strengthened the rights of thebreeder. The rights defined under UPOV areknown as “plant variety protection” (PVP). By late2005, 59 countries (plus the EU) had ratified aUPOV Convention (32 countries follow the 1991Convention, 25 the 1978 version, and 2 still operateunder older versions). Most countries of theOrganization for Economic Cooperation andDevelopment (OECD) are members of UPOV, anda growing number of developing countries, partic-ularly in Latin America, have joined. The UPOVsystem is the major example of a sui generis methodfor the protection of plant varieties, and it is seen bymany as the most straightforward choice for coun-tries wishing to comply with the TRIPS Agreement.UPOV offers important harmonization functionsbecause members use the same technical guide-lines for DUS testing, even though UPOV membercountries may provide quite different levels of pro-tection for plant varieties. UPOV makes it easier forcountries to share information and may reducetransaction costs. Countries that now wish to joinUPOV need to comply with the rules of the latestConvention (1991). However, countries that want tocomply with TRIPS do not have to become a mem-ber of UPOV. They can either design their own “ef-fective sui generis system” or design a system basedon one of the older versions of UPOV. For example,Indonesia has a PVP system based on the 1978Convention. Even though it is not eligible to join theUnion, Indonesia considered the flexibility pro-vided by the older Convention more appropriatefor its agricultural conditions. India, on the otherhand, has designed a law incorporating several fea-tures that are dissimilar to any UPOV Convention.

An alternative to PVP is provided by the utilitypatent system in a limited number of countries.A 1985 U.S. court decision (reaffirmed in 2001)ruled that plants were eligible for utility patents,opening the door to a flood of applications for thishigher level of protection (Evenson 2000; SupremeCourt of the United States 2001). Only plant vari-eties invented or discovered “in a cultivated area”are eligible for patents, thus limiting the possibilityof patents on wild relatives. Under the 1978 UPOVConvention, a variety could not be protected byboth a patent and PVP, but the 1991 Convention al-lows this double protection. Only a few other coun-tries (for example, Australia and Japan) allowpatents for plant varieties. In Japan, the patent sys-tem is used only for plant varieties that are consid-

ered innovative and not merely a product of nor-mal plant breeding. The EU does not issue patentsfor plant varieties, although the effective scope ofprotection of its biotechnology patents may includea variety or group of varieties. Based on the studyconducted for this report, utility patents for plantvarieties are not considered a reasonable option fordeveloping country IPR systems. Nevertheless, as-pects of patents for plant varieties are discussedthroughout this report because of the pressurefrom some parts of the seed industry to move inthis direction and because this option is included insome of the bilateral trade negotiations between theUSA and several Latin American countries.

A number of important parameters must be con-sidered in designing an appropriate IPR system forplant varieties. The major parameters of the mostcommon sui generis protection systems and the util-ity patent system are listed in table 2.1. The mostprominent issues in the sui generis systems involvethe so-called “farmer’s privilege” and “breeder’sexemption.” The farmer’s privilege provides thefarmer with some exemptions to IPRs, rangingfrom the right to save seed for his or her own use tothe right to exchange or sell seed, depending on thenational law. The issue of seed saving is a good ex-ample of how IPRs in plant breeding must be tai-lored to the conditions of national seed systems.Even within a single country, the requirements andconditions of different crop production systems arenot uniform, and countries could consider legal op-tions that address this variability. The breeder’s ex-emption provides that any person is allowed to usea protected variety for further breeding without re-quiring the consent of the rights holder. Undersome laws, a newly bred variety may be consideredan “essentially derived variety” (EDV), and theIPRs to that variety then depend on the rights to theoriginal variety.

The patent system does not include such ex-emptions, even though the EU Directive 98/44/ECon this matter has specifically included a farmer’sprivilege provision, in the event that the scope of abiotechnology patent extends to a group of plantvarieties. Some countries in Europe explicitly in-clude a breeder’s exemption in such cases.

The farmer’s privilege should not be confusedwith the concept of “Farmers’ Rights,” which hasbeen codified in the IT PGRFA (2001) and insome national laws. There is no uniform inter-pretation of Farmers’ Rights in relation to IPRson plant varieties.


IPRs and Plant Breeding 7

Further details on differences between protec-tion systems, on Farmers’ Rights, and on the pro-tection of biotechnological inventions can be foundin Appendix C.

ADDITIONAL STRATEGIES THATPROTECT THE INTERESTS OF THEPLANT BREEDERPolicy makers considering the design of IPR legis-lation for the plant breeding industry must recog-nize that a number of other mechanisms areavailable to protect the interests of plant breedersand contribute to the development of a competitiveand dynamic national seed sector. Decisions onIPRs should not be made without understandingand considering the other instruments thatare available to promote plant breeding and seed

production. The alternatives include biologicalprocesses, conventional seed law, contract law,biosafety regulations, brands and other IPRs (suchas trademarks), and trade secrets. As with patentsand PVP, the effectiveness of these alternativesdepends on the local capacity for enforcement.

Biological protection

The oldest mechanism for protecting a plant vari-ety is hybridization. Hybrids are the products of across between two (or more) parent lines or popu-lations. The discovery of the phenomenon of hy-brid vigor in the early 20th century opened newpossibilities for producing high-yielding and uni-form varieties of cross-fertilizing crops and offeredtwo distinct advantages for protecting the interestsof commercial seed provision. First, seed of hybridorigin will lose some yield potential and other

Table 2.1 Comparison of Major Intellectual Property Systems for Plant Varieties

Criterion UPOV 1978 UPOV 1991 Utility patents (USA)

Protection Varieties of species or genera aslisted

Varieties of all genera and species Sexually reproduced plants (andgenes, tools, methods to producevarieties)

Exclusion Nonlisted species None First-generation hybrids, unculti-vated varieties

Requirements Novelty (in trade)DistinctnessUniformityStability

Novelty (in trade)DistinctnessUniformityStability

Novelty (in public knowledge)UtilityNonobviousnessIndustrial application

Disclosure Description (DUS) Description (DUS) Enabling disclosureBest mode disclosureDeposit of novel material

Rights Prevent others from commercial-izing propagating materials

Prevent others from commercial-izing propagating materials and,under certain conditions, usingharvested material

Prevent others from making,using, OR selling the claimedinvention or selling a componentof the invention

Seed saving Allowed for private and noncom-mercial use

For use on own holding only (forlisted crops only)

Not allowed without consent ofpatent holder

Seed exchange Allowed when noncommercial Not allowed without consent ofrights holder


Breeder’sexemption

Use in breeding allowed Use in breeding allowed (butsharing rights in case of EDV)


Duration 15-20 years (depending on crop) 20-25 years (depending on crop) 20 years from filing or 17 yearsfrom granting (prior to June 1995)

Doubleprotection(PVP and patent)

Not allowed Allowed Allowed

Source: Adapted from Helfer (2002), Krattiger (2004), and van Wijk et al. (2003).

valuable characteristics (such as uniformity) in sub-sequent generations, which reduces farmers’ in-centives for saving seed. Second, competing seedcompanies cannot duplicate a particular hybrid va-riety if they do not have access to the inbred linesused to develop the hybrid variety. If the inbredscan be physically protected, they have the charac-ter of a trade secret. In contrast, companies can eas-ily duplicate an open-pollinated variety (OPV) byobtaining seed of that variety. The use of hybridsthus provides a steady demand for seed, overcom-ing much of the uncertainty in the conventionalseed market, where factors such as the weather de-termine how much seed is saved on the farm andhence the demand for fresh seed. Hybrid seed ismore expensive to produce than seed of OPVs, butif the hybrid varieties are superior in yield poten-tial and homogeneity, substantially higher seedprices can be charged.

A more recent example of biological protectionmechanisms is the introduction of genetic use re-striction technologies, operating at the variety level(V-GURTS) (Louwaars et al. 2002). In the absence ofspecial treatments, plants containing these tech-nologies produce sterile seed, thereby ensuring thatfarmers cannot save commercial seed of self-fertilizing crops like wheat and beans for subsequentplanting. The technologies also make it difficult forother breeders to use the protected germplasm.Companies are using the methods of genetic trans-formation to develop several such protection mech-anisms. None are commercially viable yet, but thepossibility of this so-called “terminator technology”has led to widespread debate and concern in thepopular press and has caused the technology to bespecifically banned in India’s Protection of PlantVarieties and Farmers’ Rights Act.

Seed laws

Conventional seed law can provide opportunitiesfor controlling access to plant varieties, even in theabsence of IPR legislation. Seed laws usually spec-ify the extent to which seed must be certified anddefine the types of variety that may be offered forsale. A certification scheme defines seed classes ofspecified origins, so that any certified seed can betraced back to a seed lot produced by the main-tainer of the variety (usually the breeder). Whereseed certification is compulsory, the breeder maydetermine who is producing seed by controlling ac-cess to breeder’s (or pre-basic) seed. Any unautho-

rized multiplication will not be acceptable to thecertification agency. These requirements mean thata public or private breeder can establish an exclu-sive contract with a seed company for the produc-tion of specified varieties, even in the absence ofIPRs. When a variety is not protected by PVP (forexample, after the rights have expired), the author-ities can assign one or more maintainers to meet thecontinued demand for seed. Seed certification re-quirements can also be used to limit informal seedsales, especially when they occur on a large scale.

Where seed law specifies that a variety must beapproved (through a registration process or on thebasis of performance tests) before entering com-mercial seed production, this provision can alsoprohibit the sale of a released variety under a dif-ferent name. In this way, the law limits the extentto which a competing company can market seed ofa protected or an essentially derived version of areleased variety, including the unauthorized useof a transgene.

Contract law

Various types of contracts can be effective in pro-viding legally enforceable agreements that restrictthe use of a breeder’s variety and offer comple-ments or substitutes to IPRs. Such contracts are ef-fective only if the provider of the genetic materialshas exclusive access or established rights to the ma-terials or can offer particular benefits to the othercontracting party. The contracts are ineffective ifthird parties have easy access to the varieties orgenes. Some contracts are aimed primarily at pre-venting seed saving and multiplication, whereasothers are aimed at protecting the germplasm frombeing used in competitors’ breeding programs.

One type of contract that is increasingly preva-lent in the U.S. seed market is the grower contract,or “bag tag.” This simple (unsigned) agreement re-stricts the farmer from using or disposing of anypart of the harvest as seed. Farmers are consideredto comply with the provisions of such contractswhen they open the seed bag.

If it is possible to control the market for the har-vested product, then another type of contract canbe enforced. The breeder can oblige a grower to usethe plant variety in certain ways and can imposerestrictions on the saving or multiplication of plant-ing material. For example, in the cut flower indus-try, the vast majority of the output is sold in alimited number of wholesale markets in the North.


IPRs and Plant Breeding 9

If a flower variety is protected in the country wherea major wholesale market is located, growers inother countries may have to sign contracts limitingmultiplication or unauthorized sale of that variety,or they risk being denied further access to the majormarket. This type of contract can be effective evenif the flower-growing country has no IPR system.

Control of output markets can also be used toregulate access to certain field crop varieties.Chapter 5 presents several examples of how accessto transgenic crop varieties is controlled.

Access to germplasm may also be controlledthrough material transfer agreements (MTAs),which may be seen as another form of contract reg-ulating the use of breeding material. When MTAsare established between genebanks or other publicinstitutions and private breeders, they can establishexclusive access, stipulate the type of benefit shar-ing in the case of commercialization, and prohibitlegal protection by the recipient of the materials “inthe form received.” Commercial firms may also useMTAs (box 2.1).

Biosafety regulations

Biosafety regulations are not meant to serve asIPRs but are intended primarily to protect the en-vironment and promote the safe use of biotech-nologies. Even so, aspects of the biosafety systemcan create property-like rights. For example, incases where national IPR systems do not provideadequate protection, biosafety regulations may beused to prohibit the sale of varieties that include

the unauthorized use of a privately owned trans-gene. In addition, biosafety data themselves maybe valuable property. The biosafety system gener-ates data from extensive testing to demonstrate en-vironmental and food safety. Such testing can bevery expensive, especially when feed and food tri-als are necessary, and most of the costs are paid bythe company that wants to register the transgene.Regulations in some countries require biosafetyanalysis for each new transgenic variety, even ifthe variety is based on a previously approved“event” (the introduction of a particular constructin a particular place in the genome). Since suchdata are usually confidential, they have great com-mercial value and create the basis for contracts thateffectively create rights over genes. Althoughbiosafety regulations may help control the unau-thorized use of transgenic varieties in countrieswithout relevant IPRs, it is important to recognizethat a biosafety agency’s mandate, budget, andpersonnel are directed towards environmentalprotection and not the enforcement of rights or ac-cess to biotechnology.

Brands and trademarks

Brands and trademarks are part of intellectualproperty law, but their utility in the seed industryis often overlooked in the policy debate aboutIPRs. Seed companies frequently register theirbrands and trademarks as a way of distinguishingtheir products from those of their competitors andbuilding up a loyal customer base. In the absence

Box 2.1 MTAs and the Seed Industry

MTAs and other contractual arrangements can be usedby private companies to control access to genes ortransgenic varieties that are protected by IPRs in onecountry, even if the recipient country does not recog-nize the particular IPR. For example, when a nationalagricultural research organization contracts with amajor biotechnology company to use particular propri-etary transgenes, the contract may specify how the na-tional organization is to use the genes, the rights toanytechnologies that are produced, and the company’sobligations (for example, to provide training or other

assistance). In some developing countries, multina-tional corporations (MNCs) may find that commercial-ization of their own transgenic varieties requires toomuch attention to marketing seed, policing violations,and enforcing rights, and they may prefer to license therights to a transgene to local seed companies. Accessto various tools and processes of biotechnology, suchas genetic transformation techniques or diagnosticmethods, is also usually subject to contracts specifyinglimitations on their use and the rights of the provider inrelation to commercial products.

Source: Authors.

of other intellectual property instruments, the de-velopment of a strong brand image and reputationcan protect a company from some types of compe-tition. While trademarks can be effective in com-munication with customers (farmers), they do notprotect a breeder from competitors who “steal” thevariety and include it in their own (branded) prod-uct portfolio.

It is much less common for crop varieties to betrademarked. Usually there is a prohibition againstusing a variety name registered under PVP as atrademark, but in some cases a trademarked vari-ety name may be very useful. For instance, flowerbreeders often register a variety through PVPunder one name but market it under a second,trademarked name, which can be used and pro-tected long after the PVP expires. Some countriesprohibit the use of separate trade names and pre-scribe that the name registered in the PVP or seedlaw lists is to be used in commerce.

Trade secrets

In some instances, secrecy is an effective way toprotect certain technologies, and the choice be-tween patenting and secrecy may depend on thetype of technology and the size of the firm. Trade

secrets may not be included in a separate body oflaw but come under standard trade law. In plantbreeding, the primary example of a trade secret isthe protection of the inbred lines used to produce ahybrid. The ability to exploit this type of secrecydepends to an important extent on the degree ofphysical security that can be provided to plantbreeding facilities and seed multiplication plots.Registration requirements (under PVP or seed law)may require the breeder to provide information onthe pedigree (e.g. the specific inbred lines that are“the formula” for breeding the hybrid) or even de-posit samples of the different parent lines. This re-quirement can nullify the trade secret unless theregistration authority can keep the information andmaterials confidential. Advances in biotechnologymake this type of secrecy more difficult to main-tain, as reverse engineering of new varieties be-comes easier. Even though such actions might becovered by the enforcement of provisions on EDVs,they help to explain the pressure from some partsof the seed industry for further limitations on thebreeder’s exemption. Trade secrets are also usefulfor protecting certain aspects of plant biotechnol-ogy, particularly procedures or techniques thatcannot be detected in the final product, such asmarkers and regeneration methods.


11

This chapter provides a brief introduction to the major actors in na-tional seed systems. These systems encompass formal institutions en-gaged in research and plant breeding, seed multiplication, and seedmarketing and use. They also include informal seed sectors based onthe saving, exchanging, and selling of seed among farmers. Seed sys-tems are usually subject to some control from regulatory regimes.Seed systems involve individuals and organizations in the public do-main, the private sector, and civil society. The overview of seed sys-tems in this chapter concentrates on trends and differences in thedeveloping world and touches only briefly on industrialized coun-tries. Appendix B summarizes information on the seed sectors in thefive case study countries, illustrates some of the differences amongdeveloping countries, and provides background references on someof the institutions and organizations featuring in the examples citedthroughout this report.

SEED SYSTEMS IN INDUSTRIALIZED COUNTRIESIn industrialized countries, seed multiplication, marketing, and dis-tribution are almost solely commercial operations. The situation inplant breeding is somewhat more complex. Commercial enterprisesdominate the market for high-value seed crops like maize, cotton,soybean, vegetables, and grasses, and companies that initially earnedmost of their revenue from seed multiplication and marketing nowinvest heavily in plant breeding to maintain their market position.For lower-value seed crops, such as small grains and legumes, pub-lic institutions such as universities and government research insti-tutes still have an important position in plant breeding in somecountries. Basic research in plant breeding, such as the developmentof selection methods or research on the genetic control of importantcharacteristics, used to be the task of public institutions. However,with the application of biotechnology to plant breeding and the as-sociated opportunities for patenting, private industry has been veryactive in these areas since the early 1980s. This activity has been ac-companied by a significant consolidation of many conventional seedcompanies into a few large multinational enterprises. For these com-panies, research is not only a service unit to maintain the firm’s posi-tion in the seed market but is also a profit center in its own right. Insome cases, companies may detach themselves from the seed market,

Plant Breeding andSeed Sectors in

Developing Countries

3

leaving operations in seed production and market-ing to specialized companies to whom they licensethe technology.

SEED SYSTEMS INDEVELOPING COUNTRIESIn most developing countries, scientific plantbreeding has largely been the responsibility of thepublic sector, often stimulated by the results of in-ternational agricultural research centers (IARCs).Plant breeding has received significant emphasissince the so-called “Green Revolution” in the 1960sand 1970s, and it has been viewed as contributingto rural development and national food securityand thus as a public responsibility. Similarly, seedproduction and distribution have been seen asvehicles for technology transfer rather than ascommercial operations. For these reasons, govern-ments have largely been responsible for organiz-ing and funding plant breeding research and seedmultiplication.

More recently, some countries have stimulatedcommercial seed supply by privatizing public seedproduction programs, encouraging the develop-ment of domestic seed enterprises, and opening uptheir seed markets to foreign investors. Developingcountries currently show a wide range of publicand private responsibilities in the seed sector, al-though basic research and breeding for most cropsremain public responsibilities while a variety ofpublic, parastatal, and private enterprises cater forseed production and marketing.

Farmers’ seed systems usually operate along-side formal seed systems. Farmers’ systems arecharacterized by traditional methods of selectionwithin and among varieties, on-farm seed multi-plication, and informal diffusion of seed fromfarmer to farmer (Almekinders and Louwaars1999). These systems still provide the vast majorityof all crop seed used by farmers in most develop-ing countries. Despite the fact that farmers’ seedsystems are built on traditional methods andprocesses, they often involve modern varieties,some of which may be associated with IPRs.

RESEARCH AND PLANT BREEDINGAlmost all developing countries maintain nationalpublic organizations for agricultural research,which are referred to here as national agriculturalresearch institutes (NARIs). Plant breeding has

traditionally been a key research area of theNARIs. In many smaller countries, NARIs dependheavily on IARCs for much of the germplasm andmethods used for breeding field crops. SmallerNARIs concentrate on selecting material fromIARC “nurseries,” which are collections of poten-tially useful germplasm that can be tested underlocal conditions. More advanced NARIs receive as-sistance in the design and operation of their breed-ing programs, including the selection of parents,the creation of genetic variation, and the develop-ment of efficient methods for selecting germplasmpossessing desired characteristics. A relativelysmall number of stronger NARIs have more ca-pacity for basic research.

Many NARIs have faced gradual reductions intheir direct financing from government, in line withoverall reductions in public expenditure, and manyhave also been affected by declining donor sup-port. The IARCs have been instrumental in build-ing the capacity of the NARIs, but budgets for thesesupport activities have also declined. The breedingprograms in most IARCs have been reduced in sizeover the past two decades as overall research fund-ing has declined and as plant breeding has facedgrowing competition from other research activitieswithin IARCs.

SEED PRODUCTIONAND MARKETINGNational seed programs were established in mostdeveloping countries following the first successesof the Green Revolution in the 1970s. Many seedsector development initiatives were supportedthrough the Seed Development Program of theFood and Agriculture Organization (FAO), whichprovided assistance for the development of basicseed farms, seed conditioning facilities, and con-tract grower schemes. These seed programs weredesigned to help spread high-yielding varieties toas many farmers as possible by making seed avail-able to government extension services and ruraldevelopment projects, often under subsidyschemes. In a few countries, notably Kenya andZimbabwe, seed production was initiated by orga-nizations serving the needs of large commercialfarmers, but these operations were later broughtunder more direct government control.

Seed policies gradually changed in the 1980s and1990s as seed production was increasingly consid-ered a potentially commercial economic activity.


Plant Breeding and Seed Sectors in Developing Countries 13

Some national seed programs were transferred togovernment corporations (parastatals), which haddifferent levels of freedom to develop their busi-nesses. In addition to putting public seed programson a more commercial basis, many countries alsobegan to support the development of local seedcompanies and in many cases also opened theirdoors to regional or global seed companies.

Countries differ widely in the success of these ap-proaches to develop a competitive commercial seedsector. Larger countries such as China and Indiatend to be able to attract a more diversified com-mercial seed sector, whereas smaller countries maybe able to provide incentives only for a few com-mercial seed suppliers. Multinational seed compa-nies tend to concentrate on a very few seed crops(such as maize or cotton), whereas local companiestend to offer a wider range of products. Many localseed companies depend on NARIs for their vari-eties, while others develop their own breeding pro-grams for a few important crops. A number of cropsthat are critical for national food security, such assmall grains and legumes, are not very profitableseed products, however. They attract much less at-tention than vegetable and hybrid seed crops.

SEED USEDespite all the emphasis on seed industry develop-ment, most seed in developing countries is stillproduced by farmers themselves. The level of farm-saved seed depends on a number of factors, includ-ing the crop and the wealth of the farmer. Cropswith a low seed rate that are produced mainly forthe market will be more likely to attract frequentseed purchase. Farmers with more resources are

more likely to use the commercial seed market. Seedthat cannot be stored easily or that tends to carryseed-transmitted diseases is also purchased moreregularly.

Farmers’ seed systems can be very effective inproviding seed of adapted varieties at the righttime and at low cost, but they can be vulnerable tonatural and man-made disasters. These systems arealso the only way that farmers’ varieties can bemaintained and further developed, so they make avaluable contribution to agro-biodiversity. Modernvarieties are also multiplied and shared in farmers’seed systems, and in many countries it may evenbe official policy to stimulate farmer-to-farmerexchange of new varieties so that those varietiescan reach remote and resource-poor farmers. Morerecently, a range of programs, often sponsored bydonors and nongovernmental organizations(NGOs), have supported farmers’ seed systemsand local seed multiplication and distribution.

SEED POLICIESAND REGULATIONSIPRs are not the only type of legislation relevant tothe seed industry. Both public and private seed sys-tems are subject to national seed legislation. Asmentioned, seed laws commonly include a varietyapproval system and a seed certification and qual-ity control system, managed by various bodies andcommittees.

A variety approval (or release) system identifiesvarieties that have value for farmers and estab-lishes a system by which the varieties are namedand described. Official variety release is usually(but not always) a prerequisite for commercial seed

Table 3.1 Costs (US$) of Variety Release in Case Study Countries

Country Procedures and cost

Source: Compiled by authors from information obtained from national authorities.

China Agronomic trials in one or more agroecological zones: US$ 150 per season

Colombia Agronomic trials in one or more agroecological zones: US$ 1,718 per zone for supervision

India Private sector entries in All-India Coordinated Crop Improvement Programs (AICCIP) trials: US$ 217per location per year

Kenya DUS test required: US$ 600 per variety or inbredNational Performance Trials (NPTs): US$ 500 per year, per zone

Uganda Private sector entries in NARO trials: US$ 120 per site (5-7 sites)

sale. The costs of testing for variety release may besubstantial (and are independent of the costs oftesting for PVP, discussed in chapter 4). Costs of va-riety release for the five case study countries arepresented in table 3.1.

The certification system introduces strict gener-ation control for seed production, in whichbreeder’s or pre-basic seed is multiplied through aprescribed number of generations to produce com-mercial seed. The breeder is in most cases desig-nated as the maintainer of the variety and the solesource of this seed. The seed certification processalso usually involves testing for seed quality (ger-mination percentage, cleanliness, and other qualitycharacteristics). Seed certification systems may becompulsory or voluntary.

The conditions established by seed laws and pol-icy greatly influence opportunities for private en-terprise, and seed policy changes and regulatoryreforms are the subjects of continuing discussion in

many developing countries (Tripp 1997; Louwaars2002). There are important interactions betweenseed regulation and IPRs for plant breeding.Because both seed regulatory regimes and IPR sys-tems can control access to—and utilization of—seed, it is important that they are compatible andcomplementary. Seed regulatory frameworks andIPR regimes also share a dependence on enforce-ment capacities. Seed regulation is usually man-aged and enforced by the state, although limitedresources often mean that state responsibilitiesmay not be addressed adequately.

More recently, biosafety regulations have beendeveloped to guide the introduction of geneticallymodified crops (Traynor and Komen 2002). Theseregulations are also an important part of the regu-latory environment of the plant breeding industry,determining what type of transgenic varieties maybe available and specifying conditions for theirmultiplication and sale.


15

This chapter examines the experience to date with the establishmentand administration of IPR legislation for plant breeding in develop-ing countries. Such an examination is limited by the fact that rela-tively few countries have yet to enact relevant legislation, so many ofthe examples are drawn from the case study countries. The chapterlooks at the implementation of PVP legislation in developing coun-tries, the scope of protection that is offered, and the administration ofPVP systems. The chapter also briefly discusses the current status ofbiotechnology patents in developing countries.

THE CURRENT STATUS OF PVP INDEVELOPING COUNTRIESIPR legislation

A study of the current state of play for IPRs in plant breeding in theSouth shows that few countries have operational PVP systems(box 4.1). A recent review shows that although more than two-thirdsof low-income countries are members of WTO, only 8 percent aremembers of UPOV (adapted from Koo et al. 2004). However, it is im-portant to understand that national legislation significantly pre-datesan application to join UPOV, that legislation is not necessarily basedon UPOV models, and that there are cases (most notably India) wherethe compatibility of national legislation with UPOV Conventions orwith Article 27.3(b) of the TRIPS Agreement has yet to be tested.

Developing countries must also pay increasing attention to bio-technology patents. The majority of developing countries have func-tioning patent offices, but only a few have any experience in dealingwith inventions related to plant biotechnology.

The establishment of PVP legislation

Pressure for the establishment of PVP in the South has come from dif-ferent sources. In Kenya, for example, the protection of plant varietieswas already included in the 1977 seed law, but this protection was notimplemented until that law was substantially revised in 1994. Themajor thrust towards implementing PVP in Kenya came from theflower industry, which currently accounts for the lion’s share ofapplications. A special office for PVP was established within theKenya Plant Health Inspectorate Service (KEPHIS), and the countryjoined UPOV in May 1999.

IPR Legislationand Management for

Plant Breeding

4

In other countries, crop breeders in public re-search institutes initiated the pressure to introducePVP. In Uganda the first discussions started in1991, organized by the public research system,which saw opportunities to earn revenues andcompensate for declining public expenditures. Thissituation has been repeated in a range of develop-ing countries.

A third impetus for the establishment of PVP isthe TRIPS agreement, which specifies the mini-mum requirements for protection. Several devel-oping countries started national debates to designappropriate laws. While these debates remainedwithin expert circles in some countries, in others—notably the Philippines and Thailand—the issuewas picked up by NGOs, which influenced the de-cision-making process. In India, the government it-self, together with some leading NGOs, organizeda wide consultation covering all states and a wide

range of stakeholders. After long debate, in 2001India passed its Act for the Protection of PlantVarieties and Farmers’ Rights. The original impe-tus for the Act came from India’s commercial seedsector, and draft bills produced in 1993, 1996, and1999 were opposed by NGOs. A Joint Committee ofParliament then traveled through the country col-lecting the views of the industry, NGOs, farmers’groups, and others and redrafted the bill in 2000 forintroduction to Parliament (Ramanna 2003). Thebill was also widely debated in India’s press.

Identifying institutional responsibilities

There is a time lag between the adoption and actualimplementation of a national PVP law. This time isused to draft implementation rules, to establish aPVP office, and to assign responsibilities for varietytesting. This period may also be used to publicize


Box 4.1 Developing Country Responses to TRIPS

Many developing countries have felt the pressure ofthe deadline specified in TRIPS and have tabled theirlaws at the last moment. Most exceptions are in LatinAmerica, where 10 countries followed the 1994 ex-ample of Argentina and Uruguay and had becomeUPOV members by 1999. The African IntellectualProperty Organization (OAPI), comprising 16 (mostlyfrancophone) countries in West and Central Africa,initiated procedures to join UPOV 1991; OAPI’s indi-vidual members have also agreed to produce legisla-tion consistent with the 1991 Convention. Most Asiancountries with PVP laws have not become UPOVmembers, even though in several cases their laws re-flect the main components of the UPOV 1978 system.Others, such as India, have applied for membership,which is still under consideration by the UPOVSecretariat. India’s 2001 Act for the Protection of PlantVarieties and Farmers’ Rights includes an exception-ally liberal allowance for farmers to save, use, and ex-change seed of protected varieties. Farmers or farmingcommunities can also register their own varieties.Some of the provisions seem to go beyond the UPOV1978 clauses, but UPOV is awaiting the implementa-tion rules to judge whether the Indian system is inconformity with the 1978 Convention. (India received

a dispensation to accede to UPOV under the oldConvention.) An authority is currently being estab-lished under the Ministry of Agriculture to administerthe Act.

Least Developed Countries have more time to de-velop their systems; as of the publication of this re-port, the deadline for compliance with the mostrelevant aspects of TRIPS had been extended to July2013. The debate in these countries is complicatedby growing pressure to combine the protection of va-rieties with concepts from the CBD and the ITPGRFA, as in the African Model Law. The Indian lawis an appealing model for some, but other countriescannot judge the adequacy of this legislation until it isimplemented.

Harmonization is a special and important issue inthe design of laws related to Plant Breeders’ Rights(PBR). All countries of the Andean Community(Bolivia, Colombia, Ecuador, Peru, and Venezuela)have agreed to a common PVP regime, but the actualimplementation and enforcement of PVP varies bycountry. Although the former East African Union in-tends to harmonize its seed sector regulations, thereare considerable differences between the Kenyan,Tanzanian, and (draft) Ugandan PVP legislation.

Source: Authors.

IPR Legislation and Management for Plant Breeding 17

the operation of the new law among all stakehold-ers, including the courts. In China, the first appli-cations were submitted two years after the law wasadopted in 1997; in India, the first applicationswere received in 2005, four years after the passageof the law.

Two common options for the location of a PVPoffice are to use existing facilities in the patent of-fice or to establish a new office within the Ministryof Agriculture (MoA), as in most UPOV membercountries. (In China, the Ministries of Forestry andAgriculture take responsibility for PVP for woodyspecies and other crops, respectively). Both optionshave advantages and disadvantages. The patent of-fice is conversant with administrative proceduresfor granting IPRs, but it has no experience with thebiological nature of plant varieties. The MoA com-monly lacks the legal expertise to operate such anoffice, but it knows the seed sector and is familiarwith plant science. It is generally easier for the MoAto acquire the legal expertise than for the patent of-fice to acquire skills in biology.

Variety testing is done under the responsibilityof the PVP office. Some countries have developed acompletely new network of testing stations (for ex-ample, 15 stations in China under the MoA). Inother countries, the task is combined with otherregulatory tasks in agriculture (for example,KEPHIS in Kenya), and in yet other countries, suchas India, existing research stations test the appli-cant varieties. Smaller countries with limitedhuman resources in the fields of taxonomy andbreeding tend to assign responsibility for varietytesting to the national breeding program. This pro-cedure has the great disadvantage that an institutemay be called upon to test its own varieties for pro-tection. This conflict of interest can be avoided byestablishing a separate DUS testing unit, often con-nected to the seed certification agency, which cancombine DUS testing with the post control opera-tions for certification. Alternatively, varieties froma particular research institute may be tested by an-other institute in the same country or abroad. Theexamples of the USA, where breeders performstheir own DUS testing, or Canada and Australia,where breeder testing occurs under different levelsof official supervision, are not commonly followedin developing countries.

One way to reduce costs and the burden on thelimited human resource base for breeding and vari-ety testing is regional cooperation in variety testing.This option is used in the EU, where responsibilities

for particular crops are shared among countries.Alternatively, countries (especially UPOV mem-bers) can accept test reports from other countriesbased on bilateral agreements. This option is usedin Kenya and Colombia, which use Dutch reportsfor flower crops to grant PVP nationally.

Initial range of crops

Most developing countries that have started to im-plement PVP are doing so for a limited number ofcrop species and genera, mainly because the pro-cedures differ by crop and because testing agencieshave to be able to handle applications. For exam-ple, China currently offers protection for 41species, including many important field crops butexcluding cotton and important horticulturalspecies. India has developed procedures for 40species but does not have any practical experienceyet. The UPOV Convention does not require coun-tries to provide protection for all crop species im-mediately. Taking time to build facilities, reducingthe administrative costs, or maintaining a moreopen playing field for certain crops may all be rea-sons for initially limiting the range of protectedcrops. Countries tend to give priority to major fieldcrops in developing their protection systems, yet itmay also make sense to concentrate on crops forwhich protection would create the best incentivefor investments in breeding—in most cases, themore commercial horticultural species.

It should be noted that the length of protec-tion available for varieties can vary. The UPOVConventions establish minimum periods for pro-tection (15 years for field crops under the 1978Convention and 20 years under the 1991 Conven-tion). Colombia recently extended its protectionperiod to 20 years as part of its law, modeled onUPOV 1978. Many countries establish coverage for15 years for field crops, but Uganda’s draft legisla-tion contemplates 20 years.

Extant varieties

Another decision that must be taken in establish-ing a PVP system concerns the status of existingvarieties. Although PVP is offered for new vari-eties only, it is considered acceptable to offer pro-tection for varieties that are released just beforethe system comes into force. Countries take dif-ferent positions on this issue (box 4.2). In mostdeveloping countries enacting PVP legislation,

a number of crop varieties will have been throughthe official release process; in many cases thesewill be public varieties, sold by either public orprivate seed companies. A decision to extend pro-tection to such extant varieties in effect provides awindfall profit for the breeder (often a NARI) inthe form of royalties. Royalties may provide awelcome source of revenue but might in somecases discourage further seed production. In caseswhere PVP legislation includes some restrictionson farmer’s privilege or breeder’s exemption, theuse of the variety in local seed systems or formalbreeding programs may also be affected.

Early experience with PVP

The three case study countries that have estab-lished PVP systems illustrate wide divergence inthe types of crops and varieties that are protected(table 4.1).

China received 1,150 applications for PVP be-tween 1999 and 2003. Of these, 411 have beengranted. Although many applications from as farback as 1999 have not yet been acted upon, the av-erage time to grant an application is 17 months(Koo et al. 2003). The vast majority of the applica-tions are for field crops; maize and rice account for

45 and 32 percent of the applications, respectively.More than three-quarters of the maize applicationsin the MoA office are for hybrids, and more thanthree-quarters of the rice applications involve ei-ther hybrids or inbred lines. Wheat, soybean, andrapeseed are the other major examples of fieldcrops seeking PVP. Two-thirds of the applicationscome from public research institutions, mostly atthe provincial and prefectural level. (Applicationsat the Ministry of Forestry PVP office are mainlyfor roses.)

Colombia has received 785 applications for PVPsince 1996, and 448 had been granted by mid-2004.The vast majority of the applications are for orna-mentals; roses alone account for 62 percent of allapplications. The major examples of PVP for agri-cultural crops are rice (12 applications to date;6 granted) and cotton (25 applications; 8 granted).Applications for other field crops include soybean,tobacco, and potato, all from the private sector.Although hybrid maize is an important crop inColombia, sold by several local firms and MNCs,there are no PVP applications for maize. Other im-portant agricultural crops, including beans andwheat, are similarly unrepresented.

Between 1997 and 2003, Kenya received over600 applications for PVP, but by mid-2004 only


Box 4.2 Differential Treatment of Extant Varieties

Source: Authors.

Some countries (for example, see Uganda’s draft leg-islation) offer no protection for extant varieties. Inothers, extant varieties may be allowed limited cover-age. China allowed protection for varieties releasedup to four years before the legislation (although theimpact does not seem significant). Colombia alloweda one-year amnesty for applications, but any protec-tion granted would cover a period beginning with theoriginal release date. The Colombian Institute forAgriculture and Livestock (ICA) chose not to act onthis provision because it felt that its varieties werealready in the public domain, but many private appli-cations (mostly for ornamentals) took advantage ofthe amnesty. India’s legislation permits PVP for publicand private varieties that are already released andnotified. Coverage begins on the original notificationdate, which is similar to the position taken by several

countries in the Commonwealth of IndependentStates.

The most controversial case regarding extant vari-eties has arisen in Kenya, which announced anamnesty that allows a full period of protection(15 years) for any released variety. This amnestywould cover, for instance, maize hybrids that werereleased in the 1960s and remain in commercial pro-duction. Most of the eligible varieties are the propertyof the Kenya Agricultural Research Institute (KARI),and although KARI has already signed royalty agree-ments with the Kenya Seed Company (KSC) for manyof them, the amnesty would mean that KARI couldcollect royalties from any other seed producer for awide range of its crop varieties. The issue has raisedconsiderable controversy, and the amnesty has not yetbeen gazetted.


108 certificates had been granted, 70 percent of themfor ornamentals, especially roses and alstroemeria.Among field crops, maize has the highest number ofapplications (accounting for 10 percent of the total); allof these applications are for hybrids from either thepublic sector or the parastatal Kenya Seed Company(KSC). The rise in domestic applications is partly dueto the amnesty granted in 2001 to previously releasedpublic varieties. The fact that this ruling is being con-tested is one of the explanations for the relatively lownumber of PVP grants issued so far.

The experience of these three countries withPVP is quite varied, but it illustrates some generalprinciples. Not surprisingly, the major interestin PVP is for those crops whose seed or plantingmaterial represents an important commercialmarket. In Colombia and Kenya, the applicants arepredominantly foreign breeding firms producing

ornamentals (table 4.2), and European DUS testingreports are used for registration. The high interestin PVP for these crops reflects their commercialvalue, their great diversity, and their ease of repro-duction. A review of PVP grants in all UPOV mem-ber countries showed that ornamentals account formore than 51 percent of all grants and that orna-mental and other horticultural species combinedaccount for 70 percent of PVP grants worldwide(Srinivasan 2004). Even in the case of field crops,commercial interests affect the likelihood of PVPapplication. In industrialized countries, where hy-brid technology usually offers sufficient protection,hybrids may not be submitted for PVP. On theother hand, the majority of PVP applications inChina are for hybrid varieties that already have acertain degree of in-built biological protection butwhich require additional legal safeguards in a very

Table 4.1 Numbers of PVP Applications and Certificates Issued in Case Study Countries

China Colombia Kenya

Crop Applications Granted Applications Granted Applications Granted

Beans 27 1Cabbage 15 7Cassava 2 0Coffee a 4 0Cotton 25 8 2 0Fruits 18 8 5 0Groundnut 10 5Macadamia a 11 0Maize 520 = 50% 248 54 = 10% 0Pasture grasses 10 0Potato 7 1 5 3 4 0Peas 7 0Pepper 10 1Pyrethrum 23 23Rapeseed 38 11 14 0Rice 365 = 34% 82 12 6Roses a 448 = 62% 279 248 = 42% 61Sorghum 7 6Soybean 30 19 8 2 7 0Sugarcane 5 5 6 2Sunflower 10 0Tea a 33 0Tobacco 4 3Wheat 84 21 30 0Other ornamentals a 214 = 29% 139 61 = 11% 15Other 53 8 6 6 31 0Total number of varieties 1,050 411 727 451 569 108

Source: Compiled from Louwaars et al. (2004:76-78). a. Data from China on woody species, including ornamentals, not included in this study.

competitive commercial seed market (table 4.2). Riceis the field crop that attracts the most PVP applica-tions in Colombia because of the competitive andprofitable domestic rice seed market. The public sec-tor may be slower to apply for PVP for many of itsvarieties, especially those without well-establishedseed markets; the surge in public applications inKenya following the announcement of the amnestyis the exception that proves the rule. Thus althoughPVP can strengthen established seed markets andprovide incentives for further investment, it is moredifficult to prove that PVP—at least at the levelillustrated in the case study countries—is a sufficientcause of new commercial seed activity.

THE SCOPE OF PVP INDEVELOPING COUNTRIESEven though two countries may both be membersof the same UPOV Convention, their enabling leg-islation may be quite different. For example, issuesaddressed in the three case study countries withPVP legislation include the regulation of farmerseed saving and seed exchange; the breeder’s ex-emption; the range of crops to be included in theearly stages of the program; the treatment of ex-tant varieties; and the wider issues raised byFarmers’ Rights provisions. Questions also ariseabout the relationship between conventional seedlaw (variety registration and seed quality control)and PVP legislation.

Seed saving and exchange

Farmer seed saving is one of the most contentiousissues related to PVP. China’s PVP legislation pro-vides a broad farmer’s privilege for saving andreusing one’s own seed, which is seen as impor-tant in a country dominated by smallholder farm-ers. The degree to which farmers can sell orprovide seed of protected varieties to others is notwell defined, and there is a great deal of informaltrade in certain varieties. Kenya also permitsfarmers to save seed of protected varieties, butKEPHIS has expressed interest in moving closer tocompliance with the more restrictive 1991 UPOVConvention. One particular concern is that manywheat farmers (some of whom cultivate quitelarge areas) either save seed or acquire it fromneighbors. Although there is considerable farmer-to-farmer sale and exchange of seed, this activityis illegal for any major field crop (whether it issubject to PVP or not) because of Kenya’s strictseed certification requirements.

As mentioned in chapter 2, EU countries thatprohibit seed saving generally exclude small farmsfrom the rule. In Colombia, a recent ruling(Resolution 2046 of July 2003) prohibits farmerswith holdings greater than 5 hectares from savingseed of protected varieties. Those with smallerfarms may save such seed, but they are required toreport to a local ICA office and give details of howhome-saved seed will be processed and used. Thesale of farm-produced seed of protected varieties isnot permitted, although a certain amount of seedselling does occur and is of particular concern tothe rice seed industry.

India’s recently passed legislation is exception-ally liberal in its definition of farm-level seed sav-ing, allowing farmers to save, use, exchange, or sellnonbranded seed of protected varieties just as theyhave done previously. It appears that selling seedto a neighbor is permitted as long as the transactionis conducted informally and the seed is not soldwith any commercial denomination or packaging.

These cases illustrate a wide range of regulationand practice with respect to farmers’ utilization ofsaved seed of protected varieties. Decisions re-garding seed saving and exchange must be basedon an assessment of the needs and conditions of thenation’s farmers, the capacities of the seed indus-try, and the possibilities of enforcing particular reg-ulations. Like many aspects of IPR management,initial legislation can establish broad guidelines


Table 4.2 Sources of Applications for PVP in China andKenya

Source China Kenya

Public research institutions (%) 67 22- National (%) 3- Provincial (%) 28- Prefectural (%) 29- University (%) 7Private sector (%) 33 69- National (%) 32 11- Foreign (%) 1 58Joint public-private (%) 9Total (number of applications) 1,150 602

Source: Compiled from Louwaars et al. (2004:76-78).


and then further adjustments can be made as con-ditions warrant.

Breeder’s exemption

There is less evidence on how the use of protectedgermplasm in other breeding programs has beenaffected by PVP. UPOV 1978 establishes no re-strictions on such use, and the private plant breed-ing industries in most developing countries arenot sufficiently well established for this issue tohave appeared as important. There are no specialarrangements for EDVs in the case study coun-tries, although China and Kenya are consideringmodifying their legislation to address this issue.The International Seed Federation is debating pro-posals to limit the breeder’s exemption, mainly toprotect commercial interests in the most competi-tive markets in Europe and the USA. This issuecould emerge in developing countries as wellwhen MNCs start to use the national PVP systemsin the South.

Farmers’ Rights

Both the CBD and the IT PGRFA describe coun-tries’ obligations to provide mechanisms for shar-ing benefits from the use of plant genetic resourceswith farming communities, but they do not spellout precise mechanisms or legal instruments. Thereare concerns about possible contradictions betweenwhat Article 9 of the IT PGRFA describes as“Farmers’ Rights” and some aspects of PVP legis-lation. There is also some debate over whether asingle piece of legislation might try to link PVP

with benefit sharing. Several countries have en-acted PVP legislation that does not address thesebroader aspects of Farmers’ Rights, while othershave combined the two (box 4.3).

The relation of PVP to national seed law

When countries design and enact PVP legislation,they need to review its relation to national seedlaw. Chapter 3 discussed the fact that in manycases national seed law (governing variety releaseand seed quality control) may complement (oreven substitute for) PVP legislation. Some coun-tries find that their seed laws must be revised tocome into line with PVP legislation. In India, forinstance, public plant varieties have alwaysneeded to be officially released and notified, aprocess that includes testing agronomic perfor-mance and recording descriptors (sufficient forseed certification, although not DUS testing). Butprivate firms could sell their varieties as “researchvarieties,” without complying with these releaseprocedures, although they needed to meet mini-mum seed quality standards and clearly specifythe variety name on the package. Now that mostnew varieties, public or private, are likely to applyfor PVP, a revised Seeds Bill establishes a NationalRegister of Seeds, which applies to all varieties of-fered for sale and includes performance testing.Thus private companies in India have traded theirfreedom to sell varieties without passing perfor-mance tests (but without legal recourse if competi-tors appropriate their varieties) for an obligationfor registration and testing linked to a legal systemof protection. There is considerable debate in India

Box 4.3 Farmers’ Rights and PVP

One of the most prominent examples of combiningFarmers’ Rights and Breeders’ Rights in one law isIndia’s Protection of Plant Varieties and Farmers’Rights Act, which includes the possibility that farmersor farming communities may register their own vari-eties; the expectation that farmers can claim compen-sation if a variety does not perform in the mannerdescribed by the breeder; and benefit sharing througha National Gene Fund.

The model PVP legislation developed under theauspices of the Organization of African Unity placesparticular emphasis on farmer and community rightsand the protection of the environment. Uganda’s draftPVP legislation includes treatments of communityrights to local plant varieties and sharing of benefitsfrom the utilization of local germplasm (through a na-tional “community gene fund”).

Source: Authors.

over whether the strict new Seed Bill sufficientlysupports Farmers’ Rights.

Both PVP and seed law may be used to limit theextent of informal (for example, farmer-to-farmer)seed sale. If the objective is to ensure that legitimateseed companies are not undermined by large-scaleinformal sales of protected varieties, a reasonabledefinition of “commercial sale” in a PVP law maybe more feasible than a full-blown mandatory seedcertification scheme that assumes, often unreason-ably, that a country can provide efficient and effec-tive certification to serve seed producers in all partsof the country. Such a definition of commercial salemay be specified by crop type or other criteria anddoes not necessarily imply acceding to the stric-tures of the UPOV 1991 Convention.

THE ADMINISTRATION OF PVPCosts of PVP

It is important to recognize that a PVP system en-tails significant costs, particularly related to DUStesting and assessment. A candidate variety mustbe grown in carefully controlled and monitored tri-als, usually for at least two seasons, to ensure thatit is novel and distinct from other varieties and thatits traits are uniform and stable. This processrequires access to good experimental sites and

adequate laboratory facilities. In addition, confir-mation of distinctiveness requires the capacity tomaintain and grow reference varieties for compar-ison as well as access to databases describing simi-lar varieties. All of these activities imply theavailability of well-trained personnel, who in real-ity may be in short supply in developing countriesand whose assignment to PVP responsibilities mayentail considerable opportunity costs.

The costs of applying for and maintaining PVPin selected countries are presented in table 4.3, alongwith comparative data from the EU and USA. Itshould be noted that the costs of application aresubstantial; in addition there are significant trans-action costs (justifying the use of agents to facilitatethe application procedure in countries like Chinaand Colombia). The maintenance fees rise steadilyover the full or initial period of protection in mostcountries; in Kenya there is a flat annual fee formaintenance. It is important to remember thatthese are only the costs of obtaining PVP. Other ex-penses related to variety testing and release can besubstantial and also must be met (representativecosts for variety release, for example, are presentedin table 3.1).

High fees for PVP can act as a disincentive forapplication, but little guidance is available on howto structure PVP fees (box 4.4). In China, mainte-nance fees for PVP are substantial, although some


Table 4.3 Costs (US$) of PVP Applications and Maintenance

Item China Colombia Kenya EU USAa

Application 217 233 200 1,115 432

Testing 556 1,396 600 1,265-1,490 3,220(155 if done abroad) (depending on

type of crop)

Granting of rights - 39 240 - 682

Annual (1-3): 181 (1): 78 (1-20): 200 (1-20): 540 Nonemaintenance fee (4-6): 236 (2): 155 (beginning 2006)(by year) (7-9): 306 (3): 233

(10-12): 398 (4-20): 311(13-15): 517(16-18): 672(19-20): 874

Source: Louwaars et al. (2004), updated with data from PVP office websites.a. The USA does not charge annual maintenance fees. In addition, in the USA testing is undertaken by the breeder and results supplied to thePlant Variety Protection Office; the testing fee in the table refers to an examination fee.


subsidies are offered for public sector applications.Nevertheless, many public plant breeding insti-tutes, particularly at the prefectural level, find theydo not have the funds to apply for PVP (Huang etal. 2003). Research managers estimate that the costof a PVP application for a single variety may be theequivalent of half a researcher’s annual budget.The private sector in China also complains aboutthe high costs of PVP. Breeders of ornamentalspoint out that they need to protect a number of va-rieties of a particular species to start commercialproduction. The local market for flowers does notyet sustain such investments, and several foreignbreeders avoid sending their elite materials toChina for this reason.

Another strategy for cost saving is to considerpossibilities for cost sharing and cooperation(Louwaars et al. 2003). There are several options formanaging DUS testing. The PVP authority itself

may provide all the staff and facilities for DUS test-ing; this alternative provides a neutral source ofexpertise, but it requires hiring and training spe-cialized personnel. Another option is to leave thetesting to the breeders (whether in public organi-zations or private firms), with the PVP authorityresponsible only for monitoring and evaluation.This option can lower the costs of establishing apublic institution, but it assumes that the breedingorganizations themselves have the capacity tocarry out DUS testing. (In Australia, breeding firmsoften collaborate to manage joint DUS trials, to savemoney.) Various combinations of these systems arealso possible. Finally, a national PVP office can con-tract another authority to conduct the tests. InColombia, all the DUS testing for ornamentals isdone abroad, while testing for field crops is donein-country by ICA staff with part-time responsibil-ity for DUS testing.

Box 4.4 Determining PVP application and Renewal Fees

Source: Authors.

Establishing the appropriate fees for PVP is animportant challenge. High fees create a barrier towidespread participation, especially for public insti-tutes or smaller firms. On the other hand, low feesmay produce insufficient revenue for the registrationand testing authorities, leading to reduced efficiencyor rent seeking. In each case it is important to decidethe extent to which the government should insist oncost recovery or, alternatively, be willing to subsidizethe agency as a stimulus to national plant breedingactivity. The need to cover the costs of variety protec-tion has to be balanced by the need to establish effec-tive incentives for stimulating widespread invention.

Different options may be considered for establish-ing the fee structure:

• One option assumes that the cost of the author-ity’s activities will be shared equally among allapplicants and crops. This option will involve acertain amount of cross-subsidizing betweencrops (for example, few applications and highcosts in testing sesame can be compensatedby many applications and relatively low-costregistration work in rice).

• Alternatively, countries may establish differentfee levels for separate crop groups (based on the

actual costs of evaluation). This option may leadto acceptable fees for crops with large numbersof applications each year, such as major cerealcrops, but it can lead to prohibitive fees ifspecial facilities need to be maintained, andcharged accordingly for crops with few applica-tions per year, such as minor vegetable crops.

• A third option would be to base the fees on thevalue of the protection for the applicant. Fees forvarieties with a larger (more lucrative) potentialmarket can be higher; hybrid rice might attracthigher fees than conventional rice varieties,or highly commercial crops like maize wouldattract higher fees than minor crops like pigeonpeas. Considerations of market size alsoillustrate why it is difficult to make comparisonsbetween countries; the potential market for avariety may be many times greater in China thanin a small country like Rwanda.

• Finally, it is also possible to establish differentfee levels for different types of applicant. In theUSA, for example, patent application and main-tenance fees for individuals, small businesses,and nonprofit organizations are only half thefees charged to larger firms.

The latter option suggests the potential of re-gional collaboration. In the EU, for example, a DUScertificate valid in all member countries can be ob-tained, based on one DUS test done at the request ofthe Community Plant Variety Office in one memberstate. Breeders still have the option to apply in oneEU member state if they plan to commercializein that country only. Regional collaboration forDUS testing deserves exploration by many devel-oping countries. For example, the members ofthe Southern African Development Community(SADC) are developing a system of regional varietyrelease which could be expanded to include re-gional PVP management. This kind of regional col-laboration in DUS testing does not necessarily meanthat national PVP laws must be fully harmonized.

Confidentiality

An additional concern regarding the manage-ment of a PVP system is the requirement for de-positing germplasm, especially the inbred linesused to create hybrids. Hybrids can be protectedby PVP on the hybrid itself and/or on the inbredlines. In the first case, procedures in many coun-tries require the applicant to reveal “the for-mula”—the parent lines and their combination.Because inbred lines are a type of trade secret(whose confidentiality can be maintained wellafter the expiry of a PVP certificate), companiesmay be reluctant to turn them over to a testingauthority, even though they value the extra pro-tection of the hybrid afforded by PVP. In India,current law requires that the National Bureau forPlant Genetic Resources (NBPGR) take samplesof imported germplasm for deposit. This law hasbeen an impediment for some firms wishingto import inbreds and germplasm under deve-lopment (as in shuttle breeding programs, forexample), because the owners may worry aboutthe security of such deposits. India’s new PVPlaw requires the deposit of protected varietiesand the inbreds of protected hybrids, and opin-ion in the seed industry is divided. Some com-panies feel that the requirement will cause noproblems, while others are wary about theprospect and anxious to see how the system willbe implemented.

Enforcement

To be effective, a PVP system must include ade-quate mechanisms for enforcement. It is important

to recognize that PVP is a private right and that therights holders are thus responsible for collectingroyalties and detecting violations of their rights.PVP offices themselves generally are not involveddirectly in enforcement, although they may becalled as witnesses or experts in actions taken bybreeders. In a recent example in Colombia, a seedcompany asked the PVP office to examine particu-lar fields and confirm that the cotton variety beinggrown was the company’s. The company couldshow that the seed was not acquired legally andused the PVP office testimony to obtain an out-of-court settlement. Colombian rice seed companiesare concerned about the scale of seed saving and in-formal seed sales among large-scale producers, andthey hope that the new resolution that limits savingseed of protected varieties to smaller farms willprovide some relief. But the companies recognizethat they will have to identify the violators them-selves and bring cases to court. They are concernedthat Colombian PVP law currently has no descrip-tion of penalties for violations.

The experience of the courts is also an impor-tant factor in effective enforcement. Chinese plantbreeding institutes often produce seed of theirown (protected) varieties themselves for fear oflosing control of them if they attempt to contractout. Seed management stations under county agri-cultural administration departments can checklicenses, and some are apparently supportingbreeders in claiming their rights and imposingfines. But many breeders complain that the knowl-edge of the courts is often insufficient to enforcethese rights effectively.

PATENTSPatents are national in scope, and an inventor mustapply for a patent in each country where this pro-tection is desired. Multiple applications are facili-tated through the Patent Cooperation Treaty(PCT), which offers a simplified filing system in124 member states. The PCT facilitates the appli-cation process and encourages the joint technicalexamination of applications. A single applicationis made, with the level of fees corresponding tothe number of countries in which protection issought. Similarly, regional patent organizations inAfrica—the African Regional Intellectual PropertyOrganization (ARIPO), mainly in Southern andEastern Africa, and OAPI in West and CentralAfrica—take much of the burden of processing



patent applications from the offices of the membercountries. However, mechanisms such as PCT andARIPO leave the final responsibility for grantingor rejecting applications with the individual na-tional patent office. The OAPI is a multinationalsystem in which one application can be filed andresult in a patent that is automatically effective inall member states.

Only a few developing countries have experi-ence with patents related to plant breeding (box 4.5).No developing country recognizes plant varietypatents, and most are just beginning to considerhow to approach decisions on the protection of re-search tools and genetic material used in biotech-nology. The case study countries illustrate a widerange of approaches and capacities in patentingrelated to biotechnology.

Because there are few patents related to plantbreeding in most developing countries, there islittle experience with enforcement. However, un-like PVP, patents in agriculture can draw uponexperiences with enforcing patents of industrialapplications. Many countries have law firms withexperience in pursuing cases of patent infringe-ment, and extensive international experience andthe threat of future claims can affect behavior. Forinstance, India’s National Botanical ResearchInstitute (NBRI) decided not to go forward with li-censing its Bt (Bacillus thuringiensis) gene constructto local seed companies in 2004 because it wasuncertain if the construct’s components offered suf-ficient freedom to operate in the climate of thecountry’s revised patent law and in light of thelegal capacities of MNC patent holders.

Box 4.5 Experience in Patenting for Plant Breeding and Biotechnology

Source: Authors.

China has the most experience of the case studycountries. Patents are administered by the StateIntellectual Property Office (SIPO), which is an inde-pendent organization. China now has more than 20years of experience with its patent system; 100,000applications were filed in 2003. Although livingorganisms such as plant and animal varieties are noteligible for patents, genes may be patented. By 2003there were more than 100 applications for genepatents related to agriculture. Biological processes,such as transformation methods, are also patentable.In addition, “methods of breeding” can be patented,which effectively allows patent protection of hybridvarieties. A number of such patents have beengranted, but the scope of allowable claims and theimpact of these patents is not well known. It appearsthat the supply of examiners with sufficient biologicalexpertise for considering biotechnology applicationsis not a constraint in China.

India provides a sharp contrast. Although India hasa well-established patent system, the law has specifi-cally excluded the protection of “methods of agricul-ture.” The amended law (January 2005) extendsprotection to areas such as agrochemicals and theproducts of biotechnology. It allows the protection ofmicroorganisms (as required by TRIPS Article 27) andgenes, although case law will have to determine the

extent to which agricultural exemptions will limit theinclusion of plant varieties in the scope of protection.In the period preceding the recent amendment, inven-tors could deposit an application for a patent in aso-called “mailbox” procedure, which enabled theseapplications to be considered as soon as the newamendment came into effect.

In Colombia, the patent office under the supervi-sion of the Ministry of Commerce received 1,209 ap-plications in 2003, the majority of which were filedthrough the PCT. The office employs 15 examiners,one of whom works on biotechnology. Genes andplant varieties cannot be patented (in accordance withan Andean Community agreement), but microorgan-isms “not found in nature” and transgenic varieties areeligible for patents.

In Kenya, patent applications are handled by theKenya Industrial Property Institute (KIPI), which em-ploys 20 examiners, several of whom have experiencein biotechnology. Kenyan law allows the issuance ofboth process and product patents in biotechnologybut excludes patents on plant varieties. In Uganda, thenational patent office has a very limited capacity toexamine applications in biology. Most of its work con-centrates on examining ARIPO and PCT reports, and ithas not yet approached many of the issues related tobiotechnology patents.

27

There are expectations that new or strengthened IPR regimes forplant breeding in developing countries will provide increased incen-tives for private seed sector activity. It must be remembered that therehas been significant commercial seed production in many develop-ing countries for a number of years without any IPRs, so the challengeis to identify the ways in which new IPR regimes might affect thepriorities and strategies of the commercial seed sector. This chapterexamines experiences in the commercial seed sector with PVP and theprotection of biotechnology.

PVP AND PRIVATE SEED PRODUCTION INDEVELOPING COUNTRIESImpact in industrialized countries

There is a limited literature on the impact of IPRs on the seed indus-try. A full review is beyond the scope of this report (see Lesser 1997;Srinivasan 2001; Eaton 2002), but the studies provide only limited ev-idence of the effects of PVP in industrialized countries. Studies in theUSA have examined the trends in variety release and have surveyedbreeders’ perceptions. Taken as a whole, these studies indicate thatprivate sector breeding in a number of nonhybrid crops increased fol-lowing the PVP Act of 1970, but in the case of most crops it would ap-pear that PVP has played only a moderate role in stimulating thisactivity (Perrin et al. 1983; Butler and Marion 1985; Kalton et al. 1989;Butler 1996; Frey 1996; Alston and Venner 2002). For wheat, Alstonand Venner (2002) found that private sector investments in the USAhave remained static, while those of the public sector increased.

Studies in other countries are also inconclusive about the effects ofPVP. Penna (1994) found an increase in the development of some hor-ticultural varieties but not of others in the UK after the introduction ofPVP. In Canada, a survey of breeders following the introduction ofPVP reported some increased breeding activity in horticultural cropsbut less in grains or oilseeds (Canada Food Inspection Agency 2001).In Spain, Diez (2002) found a correlation between the number of PVPcertificates granted per crop species and the availability of protection,through either PVP or the potential to develop hybrid varieties. Evenwhen there are relationships, however, alternative explanations arepossible. It is thus difficult, if not impossible, to attribute increasedbreeding investments to PVP alone because of the long-term changes

Impacts of IPRs onSeed Companies5

involved and the role played by a number of factors,such as developments in markets and other policies.

There is not sufficient experience with PVP indeveloping countries to allow any kind of statisti-cal analysis of impact (box 5.1). Even so, a review ofrecent events in those countries that have estab-lished PVP provides some indication of what mightbe expected as PVP is instituted more widely.

Company attitudes towards PVP indeveloping countries

The attitude of the private seed sector towards newIPR regimes in a particular country depends to aconsiderable extent on the recent history of the do-mestic seed sector’s development.

In India, an exceptionally diverse and dynamicseed sector has developed over the past two de-cades, supported by quite liberal seed laws. Indianprivate seed companies are well aware of the newPVP law, and most hope to register their varietiesdespite what they generally consider to be weakprotection. But there is considerable uncertaintyabout what such registration will entail, and towhat extent it will be regulated by seed law or PVPlaw. Some industry representatives are concernedabout the costs and efficiency of managing thelarge-scale DUS testing that will be required. Manycompanies welcome the possibility of protectingtheir hybrids (especially for controlling the theft ofinbreds), yet some express reservations about therequirement for depositing protected inbreds withNBPGR. In addition, many Indian companies hope

that the establishment of PVP will usher in a newpolicy that provides greater access to publicgermplasm. Most Indian companies express an in-terest in this possibility and a willingness to pay foraccess to such material.

In China, PVP is only one aspect of major policychanges in the past decade that encourage privatesector participation in the seed sector and eliminatethe monopoly of the public seed companies. Manysmaller, start-up companies have appeared andseveral larger ones are seeking partnerships withforeign companies. Attitudes towards IPRs differdepending on the size and nature of the company.The larger, well-resourced companies, usually withorigins as public corporations, are devoting profes-sional staff to IPR management, primarily PVP andtrademarks.

Private seed companies have appeared only re-cently in Kenya, following the reversal of policiesthat supported a monopoly of the partially publicKSC. Kenya established PVP at about the sametime that it started to liberalize the seed market.Local companies have not yet applied for PVP fortheir varieties, even for maize OPVs, partly becausethey view the process as involving high transactioncosts. Colombia has had a small domestic privateseed sector for many years; earlier it depended onpublic breeding, but it has recently developed itsown breeding capacity for a few key crops. Itwould appear that the major domestic breedingeffort that takes advantage of PVP is rice, whileMNCs utilize Colombia’s PVP for other field cropssuch as cotton and soybean.


Box 5.1 Early Evidence of the Impact of PVP

Source: Jaffé and van Wijk (1995).

An early example of the impact of PVP is found in astudy in Argentina, which enacted PBR legislation inthe 1970s and joined UPOV (1978) in 1994. As of1994, 79 percent of the 622 PVP titles issued inArgentina were for OPVs, mostly for field crops suchas soybean, wheat, and alfalfa. In the early 1990s, theNational Seed Institute (INASE) was created to super-vise seed trade; it was a public institute but financedentirely by fees. One of its duties was to enforce PVP,and it was able to police seed sales in the country andimpose fines for violations. By mid-1994, INASE had

levied 163 fines for violations of PVP. The effect wasto greatly reduce the illegal trade in wheat and soy-bean seed by unregistered dealers and grain elevatorsand increase the market share for the small domesticseed companies that depended on these crops. Theseactions have been credited with helping to save thisindustry, which was otherwise threatened by wide-spread informal seed sales, but there is little evidencethat the private sector has put additional resourcesinto these crops as a result of the establishment andenforcement of PVP.

Impacts of IPRs on Seed Companies 29

The existence of PVP legislation should alsomake foreign companies more willing to providetheir more advanced breeding lines and varietiesto a country, but this willingness depends on theeffectiveness of enforcement. In India, some localrepresentatives of MNCs say that they still haveonly restricted access to the parent company’sgermplasm, while others say that the situation isimproving. In China, foreign companies are watch-ing the experiences of domestic competitors inpushing through enforcement cases. Foreign seedcompanies have been rather cautious about usingthe new PVP system. They are worried about leak-age of their material during the DUS testing, andmany are concerned about the effectiveness of en-forcement. In many cases, they cite perceived weakenforcement possibilities as a reason for refrainingfrom introducing elite material in the Chinese mar-ket or investing in major breeding programs (withpartners). The situation with vegetable crops is il-lustrative. Many domestic companies are applyingfor PVP protection but still seem to be concentrat-ing on hybrids. Foreign companies, some of whomeven use China as a production base for other mar-kets, have generally limited themselves on the localmarket to introducing older varieties whose origi-nal protection elsewhere has almost expired.

Incentives for OPV production

Given that hybrid varieties already offer a certaindegree of in-built protection, it might be expectedthat the major effect of PVP would be to increase in-centives for plant breeding and seed production forOPVs. Because most PVP regimes in developingcountries do not limit farmer seed saving, however,the potential for repeat sales of protected OPV seedis significantly reduced. This situation helps to ex-plain the apparently modest impact of PVP onprivate investment in OPVs.

In Colombia, there was already private sector in-volvement before the establishment of PVP.Companies now seek protection for their rice vari-eties, but there is not sufficient evidence to demon-strate increased private rice breeding activity dueto the IPR regime. Most of the farmers who pur-chase rice seed manage commercial operations (theaverage holding is about 32 hectares), and manypurchase seed rather than saving it, so the rice seedindustry has a reasonable market. Nevertheless,considerable informal seed sales, and the fact thatno criminal penalties are described for PVP viola-

tions, mean that incentives for seed companies arestill limited. The MNCs operating in Colombiaapply for PVP on soybean and cotton varieties, butthe advent of PVP in Colombia has not seen theemergence of private plant breeding for crops suchas OPV maize or beans.

Two Kenyan companies are producing and mar-keting their own maize OPVs, and KSC also mar-kets public OPVs, but the private companies haveso far not applied for PVP for their varieties (andtheir seed sales for these are modest). Private com-panies in Kenya are not investing in breeding forother nonhybrid seed crops.

There is not yet much indication of any in-creased private sector interest in breeding OPVs inChina, where PVP was introduced only recently.One of the largest diversified seed companies,China National Seed Group, claims that PVP hasnot affected its mix of products or breeding strate-gies. Breeding of OPVs by the private sector (andthe marketing of imported OPVs) is minimal andconcentrates on small market niches where there isdemand from commercially oriented growers whovalue access to good quality seed. Both domesticand foreign companies indicate that they do not yethave sufficient trust in enforcement possibilities toconsider OPVs seriously.

The Indian private seed industry is large and di-verse, and no single attitude can be said to charac-terize its breeding strategies. There is relativelylittle evidence at this early stage that the new PVPlaw will elicit much additional breeding activity forOPVs. A few private companies already have theirown OPVs (for example, of rice, cotton, and certainvegetable crops); they expect the new legislationwill help protect these varieties from competitors,but at this point they have no plans to expand theirOPV breeding. A few companies say that if the PVPlegislation is effective they may expand into non-hybrid seed, but many others reject the possibility,at least in part because of the very liberal scope forfarmer seed saving and exchange. Some seed com-panies express interest in nonhybrids as a way intothe hybrid market. For instance, several companiesbegan conventional rice breeding programs as away to gain a foothold in what they hope could bea lucrative hybrid rice market.

Industry structure

There is much debate and concern regarding con-centration in the seed sector. Economic research on

the seed industry for grains and oilseeds in NorthAmerica has identified the increased scope of IPRsas one factor contributing to this trend (for exam-ple, see Lesser 1998; Fulton and Giannakas 2001;King 2001; Fernandez-Cornejo 2004). Most atten-tion has focused on the crop sectors in whichpatents play an important role, due to the applica-tion of modern biotechnology. There is less atten-tion to the effects of PVP (Lesser 1997), and evenbasic statistics on market shares are difficult togather, except for publicly listed companies.Srinivasan (2004) recently examined the degree towhich the ownership of PVP certificates in indus-trialized countries is concentrated. He finds that al-though the share of certificates owned by a fewseed companies is not indicative of exceptionalconcentration at a global level, individual countrystatistics show concentration for particular crops.Much of this concentration is a result of the manymergers that took place in the seed sector in the1990s. But the concentration of ownership of PVPcertificates is more a measure of the number ofproduct lines available to farmers, and actual mar-ket shares may be more or less concentrated.Whether the level of concentration found in in-dustrialized countries is a matter of concern isopen to debate (for example, see Mooney 2000),but it illustrates trends that bear scrutiny in devel-oping countries.

IPR regimes for plant breeding have not been ineffect in developing countries for enough time toallow any examination of the impact on the struc-ture of the seed industry. Indeed, many countriesfind their commercial seed sectors in a position ofexpansion and diversification in response to liber-alization policies, with or without PVP. But thepossible effects of PVP on industry structure de-serve monitoring. In India, PVP will likely elimi-nate many of the companies that sell varietiesdeveloped by other firms under different namesand the fly-by-night operations that sell seed of un-certain origin. Yet if the new PVP and seed lawsraise the costs of bringing a new variety to market,small companies that specialize in niche marketswill have fewer incentives to operate. (It has al-ready been noted that small seed companies inKenya currently avoid PVP because of its costs, apractice that could allow larger competitors to ap-propriate their varieties.) Another concern in Indiais the role of very small private operations, oftenfarmers, who are linked to public breeding insti-tutes and play an important role in the initial pro-

duction and popularization of new public rice va-rieties, particularly in more marginal environments(Pal et al. 2000). Whether such a system will con-tinue under the new PVP and seed laws remains tobe seen.

In Uganda, a number of national seed compa-nies are emerging in the absence of PVP, whichmay be explained more by the gradual decline ofthe public seed enterprise (now privatized) duringthe past decade than by the prospect of protection.

Enforcement

Seed companies are learning that most of the re-sponsibilities for enforcing PVP fall to them. Insome of the larger Indian firms, new staff positionshave been created for monitoring and advising onintellectual property issues. Some companies havetried to deal with particular violations of their in-tellectual property (such as the imitation of brandnames or theft of inbreds) by hiring lawyers and oc-casionally pursuing court cases, but company in-tellectual property skills have not grown strongeras a result. Companies that are part of largercommercial holdings can draw upon the legalcapacities of the parent company. Several largecompanies in India have developed genetic finger-print data for court cases regarding variety theft,but they have not yet been able to get such evidenceadmitted.

Many smaller Chinese companies, on the otherhand, have established themselves in order to pro-duce and sell seed of competitors’ varieties ille-gally, reportedly without knowledge of restrictionsimposed by IPRs. Some of the larger companies de-scribe the current situation as a learning phase fora market that does not have a long history of IPRs.The CEO of one major domestic seed company ex-plained that they pursue as many PVP infringe-ment cases as possible, because they feel it isnecessary to “educate” their competitors, as well asthe legal system, about the new rules of the game.

THE USE OF OTHER METHODSOF PROTECTIONHybrids

Despite the biological protection offered by hybrids,the majority of attention for PVP in China is on hy-brids or inbred lines, accounting for about two-thirds of the PVP certificates issued to date for field



crops. Plant breeders are concerned about the lackof physical security for their inbreds in seed pro-duction plots and hence are willing to invest in PVP.Even though PVP can help improve the protectionof their hybrids, some companies continue to use(modified) three-way crosses that lower the possi-bilities that competitors can acquire their inbreds.

The situation is similar in India, where seedcompanies are anxious to apply for PVP for theirhybrids. There are many private seed companies,and seed production usually takes place withcontract farmers in specific areas of the countrythat have appropriate agronomic conditions andgrower experience for efficient seed production.The juxtaposition of many small seed producers forcompeting firms and the impossibility of providingstrict monitoring means that inbreds and othergermplasm may be stolen or traded. Some ob-servers estimate that one popular cotton hybrid hasleaked from the company that developed it and isnow produced and sold under different names byas many as a dozen competitors. The hope is thatthe new PVP and seed laws will allow companiesmore control over their inbreds.

In countries where the physical protection of in-breds is less problematic (either because crosses aremade outside the country or because commercialcompetition is less intense), PVP for hybrids is lessof an issue. This seems to be the case in Colombia,where neither MNC nor domestic maize hybridshave sought PVP. The situation in Kenya is morecomplex. The public (and parastatal) maize hybridsare seeking protection, in part because of the possi-bility of royalties, but the maize hybrids of thesmall domestic companies have yet to apply forPVP. In Uganda, where a local seed company pro-duces maize hybrids on contract for Monsanto, thecurrent lack of PVP means that the operation mustbe very closely supervised (all inbred parent seedprovided by the company has to be planted and allthe males destroyed immediately after pollination),which adds to the cost of the seed.

Seed laws

Seed law can also be used by private companies toprotect their rights. In Uganda, exclusive licensecontracts with seed producers to produce NationalAgricultural Research Organization (NARO) maizevarieties are based not on PVP but on a gentlemen’sagreement about NARO’s ownership of the vari-eties, backed by seed certification requirements.

Companies cannot produce commercial seed whenthey cannot demonstrate access to NARO-suppliedbreeder’s seed. This requirement may not stop themfrom commercializing such varieties abroad, butany such attempt may exclude them from access tofuture NARO releases.

In China, companies are also able to controlsome illegal sales of their varieties through seedregulations that require seed companies to be certi-fied. Thus smaller, fly-by-night propagators or ven-dors can be shut down, or bags of seed can beremoved from shops, by bringing violators to theattention of the local (county or city) office of theAdministration of Industry and Commerce.

Contracts

The importance of contracts for enforcing rights toplant varieties is best illustrated by the cut flowerindustry, which is able to manage production bycontract growers in countries with and without IPRregimes. Most flower producers in Colombia andKenya are only vaguely aware of the PVP offices intheir own countries, but they are well acquaintedwith the royalties that they pay on planting mater-ial, negotiated with the flower breeding companiesin Europe or elsewhere.

Given the possibility of controlling illegal pro-duction through the withdrawal of contracts andthe relative ease of monitoring wholesale markets,it is fair to question the role of PVP regimes in pro-ducer countries for the flower industry. Many pro-ducers in Colombia and Kenya say they saw noparticular change in their conditions or marketswhen their countries joined UPOV. On the otherhand, these producers may not be aware of the de-gree to which their choice of varieties (presented incatalogues to the growers) may be influenced bythe breeding company’s confidence in the businessclimate of those countries with PVP legislation.

The case of Uganda illustrates that a country canattract a buoyant flower production industry with-out a PVP regime. If the flower varieties are pro-tected through PVP in the country of destination(or if they are trademarked), then PVP in the coun-try of origin may be irrelevant. The flower industryin the Netherlands is lobbying for strong IPRs inthe main production countries, however, to createadditional ways to tackle infringements. This pro-tection is particularly important where a domesticmarket and additional wholesale markets develop,such as direct exports from Kenya to the Middle

East and other parts of Africa. Some producers inColombia believe their industry is better positionedthan that of neighboring Ecuador (which does nothave a functioning PVP system).

Business practice

Business practices can also help to combat the ille-gitimate use of company varieties. The seed in-dustry in India has had to contend with highcompetition and very little legal protection for itsgermplasm for nearly two decades. Many compa-nies place great emphasis on the importance of de-veloping a brand image as a way of encouragingfarmers’ loyalty and protecting themselves fromimitators. But following up on the misuse of abrand requires time and resources. One companyhas faced repeated instances of people selling“seed” in falsified bags, but it has been able to catchperpetrators only twice, and the only case thatmade it to court resulted in just a small fine.

The MNCs are particularly experienced in usingother business practices to help protect their vari-eties. The most important of these practices is the se-lection of local partners in the initial stages formarketing and possibly also production. Companiesrepeatedly stress this issue in interviews. While theywill reinforce these agreements with contracts, they

want to minimize the risk that they will end up in adispute with their business partner. The MNCs gen-erally have low expectations of enforcing contractsin the study countries, and in any case once materialhas leaked out it is too late.

PROTECTING BIOTECHNOLOGYThe MNCs have made exceptionally large com-

mitments to the development of transgenic cropsand are anxious to protect their investments. In in-dustrialized countries, the effective enforcement ofpatents and PVP is sufficient to limit the appropri-ation of genetic material by competitors (althougha number of complex court cases are concernedwith determining the actual ownership of some ofthis technology). Prohibiting seed saving by farm-ers has proven somewhat more difficult, andMonsanto invests significant resources in detectingviolations, initiating a number of lawsuits in NorthAmerica related to seed saving of its transgenicvarieties. Nevertheless, the illegal use of seed oftransgenic crops is very modest in these countries.

The situation is different for developing coun-tries, where IPR regimes are not necessarily inplace, enforcement capabilities are often poor, andthe range of informal seed transactions is wide.


Box 5.2 Protecting Biotechnology: Roundup-Ready Soybean

Source: Authors.

Several countries in South America produce RR soy-beans, although much cultivation is illegal because ofbans on transgenic crops (for example, in Brazil andParaguay). These soybeans were first introduced toArgentina, where they contributed to an expansion insoybean cultivation and exports. Although genes canbe patented in Argentina, Monsanto was unable tomake an application in time, so its RR soybeanvarieties are protected by PVP only. The great popu-larity of RR soybean varieties was counterbalanced bythe black market for seed; only a small proportion offarmers bought seed from legitimate sources, andMonsanto temporarily stopped selling soybean seed inArgentina in early 2005.

Similar problems are evident in Brazil. Owing todebates and delays regarding official approval for thecultivation of transgenic varieties, all of the country’s

substantial RR soybean harvest is illegal and based onblack market seed, much of it brought across the bor-der from Argentina. At one point Monsanto suggestedlevying royalties from shippers in Argentina andBrazil, which provoked much debate. Monsanto hasnow taken steps to enforce its patent rights onArgentinean shipments of soybeans arriving inDenmark. It appears that the most likely solution is tocharge a royalty based on grain sold at harvest, to becollected by grain dealers, cooperatives, and proces-sors. Negotiations are in progress with producers’organizations and ministries of agriculture, althoughthere is still considerable opposition, especially withregard to charging royalties on farm-saved seed.Monsanto has said that it will not provide advancedsoybean technology to these countries until a satisfac-tory royalty system is established.


The MNCs are particularly anxious that develop-ing countries adopt strict IPR regimes. Foreignseed companies operating in India that usebiotechnology in their breeding programs expectthat the new patent law will provide effective pro-tection after an initial maturation period, and

many have filed applications, using a “mailbox”procedure. Such applications are considered at thestart of the new patent law. The use of this proce-dure addresses restrictions on late registration. Atthe same time, companies are increasingly waryof working with technologies that may contain

Box 5.3 Protecting Biotechnology: Bt Cotton

Source: Authors.

China has the longest experience with Bt (Bacillusthuringiensis) cotton of any developing country. InChina, Bt cotton varieties are available through ajoint venture between Monsanto, Delta and Pineland(DPL), and the Hebei provincial seed company.Separate gene constructs and Bt varieties have beendeveloped by the Biotechnology Research Institute(BRI). It was estimated that almost one-third of all ofChina’s cotton area was planted with Bt varieties in1999, and 58 percent in 2003 (Pray et al. 2002;James 2003). Monsanto has patent protection inChina for their transformation methods and the 35Spromoter gene, but not for the cry1Ac gene con-struct. The BRI has patent protection for its two Btconstructs, but it acknowledges that its marketingcompany (Biocentury) faces problems in enforcingthese patents. Cotton varieties cannot be protectedby PVP in China. There is widespread illicit produc-tion and marketing of Bt seed. DPL’s construct re-portedly has been crossed into other varieties byfarmers. Some observers believe that biosafety regu-lations provide the most effective means of limitingillicit sales, but there is widespread cultivation of Btcotton varieties in provinces for which approval hasnot yet been granted.

India’s experience with Bt cotton has also attractedwidespread attention. Its first Bt cotton varieties werereleased through a joint venture between Monsantoand India’s largest seed company, Mahyco, which itpartly owns. When the varieties were released it wasnot possible to patent genes in India, nor was the PVPsystem in force. Mahyco’s Bt varieties were approvedonly for certain states, but a thriving undergroundmarket for the seed developed in other areas. Thereare estimates that half the Bt cotton grown in thecountry is illegal. Several new Bt cotton varieties wereapproved in selected states in 2005, including furtherMahyco varieties and varieties from two local seed

companies that license the Monsanto-Mahyco gene.Monsanto’s strategy with respect to Bt cotton in Indiahas now shifted towards technology provision ratherthan direct marketing. A joint venture (Mahyco-Monsanto Biotechnology Ltd.) is providing the Bt genefor cotton to Indian seed companies. As the companydoes not “own” the gene in India, the contract isbased on access to the biosafety data that are neces-sary for approving any transgenic variety.

Bt cotton plays a part in the policy of theColombian Government to revive its cotton industry.Both Monsanto and the Colombian government areanxious that the experiment to introduce Bt cotton in2004 works well, and considerable care has beentaken to avoid unauthorized production. The produc-tion and sale of seed of the Bt variety is licensed to alocal seed company. Farmers who want to grow Btcotton must register with a cooperative, throughwhich they sell their harvest. The seed company andICA monitor cotton fields to ensure that growers com-ply with the requirements for planting a non-Bt refuge.The Bt variety does not yet have PVP; the Bt gene isnot patented in Colombia (which does not allow genepatents), but Resolution 2046 makes it illegal to savetransgenic seeds on the farm. The strict enforcement isexpected to prevent any illicit activity.

Bt cotton has also been grown in South Africa since1998 (Thirtle et al. 2003). A DPL cotton variety wasintroduced under very controlled conditions. The seedis provided by one private company; growers must beregistered members of a farmers’ organization, and theharvest can be sold only at designated ginneries.Similar controls characterize the cultivation ofMonsanto’s Bt cotton in Mexico. Farmers have to signseed licensing contracts which forbid saving or re-planting the seed, require sale of the harvest at desig-nated ginneries, and allow Monsanto officials to makespot checks on farmers’ fields (Traxler et al. 2001).

components that could be in the “mailbox” andeventually fall under an Indian patent.

But even when IPR regimes are in place, localcustoms and enforcement inadequacies make theprotection of biotechnology a considerable chal-lenge. Nevertheless, MNCs have been particularlyanxious to establish a foothold for their transgeniccrop varieties in developing countries and haveoften been willing to risk operating in situationswhere enforcement possibilities are limited. Thegamble has paid off in some instances and pro-vided valuable lessons in others. The two mostprominent cases concern Monsanto’s technology:herbicide-tolerant Roundup-Ready (RR) soybeanand insect-resistant Bt cotton (boxes 5.2 and 5.3).

Controlling transgenic varieties

It is particularly difficult to control seed saving oftransgenic varieties by farmers, especially becauseeven those countries with PVP legislation usuallyallow a farmer’s privilege. Latin American farmers’objections to Monsanto’s proposed royalty collec-tion at harvest are based on their rights to saveseed. Where hybrid technology is available, it canmake some contribution. For example, the fact thatall of India’s Bt cotton varieties to date are hybrids(and most Indian cotton farmers are accustomed tobuying fresh seed each season) probably con-tributes to limiting the degree of informal transferof Bt cotton seed in India. Specific seed contracts (asin Mexico) or government resolutions forbiddingany seed saving of transgenic varieties (as inColombia) may help, although it remains to be seenwhether such contracts are considered legal (be-cause they may contradict the provisions ofFarmers’ Rights) and whether they can be enforcedon a large scale. Where the sale of the harvest canbe monitored and controlled, the company can de-tect the use of unapproved seed, or (as in the case

of soybean) royalties can be charged. But theseenforcement strategies require considerable ad-ministrative capacity, and it is not clear if they arefeasible for dealing with large numbers of smallgrowers spread over a wide area.

In countries that have considerable plant breed-ing capacity and a large number of commercialseed producers (China and India, for example),keeping transgenic varieties from the hands ofblack market seed producers is a particular chal-lenge. Both PVP and patents address this problem,but the conscientious enforcement of the seed lawscould eliminate much of the illicit transgenic seedcurrently available to farmers. A number of ob-servers in India and China place their hopes onbiosafety regulations for controlling the illegal saleof transgenic seed, but this form of control is ap-propriate only at certain levels. Biosafety authori-ties are mandated to monitor the environmentaland public health aspects of the use of transgeniccrops and are not trained or equipped to policeseed markets. If unapproved transgenic varietiesare detected, sanctions defined in biosafety regula-tions can be applied, but the biosafety agency isusually not the appropriate source of enforcement.

The problem of controlling the use of transgenesby established competing seed firms would appearto be the least of the worries of technology owners.In most cases, a combination of biosafety regula-tions (identifying the genetic background and con-ducting field trials before approval) and simplevariety registration requirements would limitmany possible instances of misappropriation. Thusadequate protection and incentives for transgenictechnology development depend on the appropri-ate division of responsibilities between seed law,biosafety regulation, and IPR regimes. Overly rigidIPRs are not necessarily the answer, and attentionto adequate enforcement of basic regulations isliable to yield larger dividends.


35

IPR regimes for plant breeding have important implications for themanagement of public sector agricultural research. NARIs need to de-velop policies that help them decide when to use intellectual propertyfor their own inventions, how to enforce these rights, and how to gainaccess to protected technologies from elsewhere. Strengthened IPRregimes are not the only factor that motivates NARIs to consider strate-gies for generating revenue, but PVP and patents provide additionalopportunities whose management requires careful thought. The pos-sibilities of earning royalties have implications for the ways in whichscientists are rewarded, the development of enforcement capacity, andthe management of public seed production programs. The pursuit ofIPRs for NARI technology also has significant implications for thetypes of crops, breeding strategies, and targets selected by NARIs.

International agricultural research is also affected by IPR regimes,and IARCs require carefully considered intellectual property policies.They need to consider how this new environment affects their inter-actions with NARIs and the private seed sector, and they need tomake sure that their use of protected technology allows them to de-liver products to their clients.

INTELLECTUAL PROPERTY POLICIES IN NARIsVery few NARIs in developing countries have comprehensive IPRpolicies. One of the exceptions is Brazil, where the BrazilianAgricultural Research Corporation (Embrapa) has long experience inmanaging IPRs. In 1996 Embrapa published its policy for managingIPRs, which included the formation of an Intellectual PropertyCommittee that meets twice a year to discuss policies and issues(Sampaio 1999). The policy emphasizes that Embrapa will make max-imum use of IPRs through the licensing or transfer of proprietarytechnology and states that royalty-free licenses will be used onlywhen their use is consistent with Embrapa’s public service commit-ments. Embrapa has also reviewed its licenses for biotechnology toolsand has negotiated several agreements with foreign intellectual prop-erty holders, some of them based on reciprocal access to Embrapatechnology. Embrapa’s individual research units each have an IPRcommittee to deal with specific questions.

Few other large NARIs in the South have advanced this far indefining IPR policy. China’s public research institutes have consid-erable experience with IPRs, but most NARIs in China lack written

Impacts of IPRs on PublicSector Plant Breeding and

Seed Production

6

policies on intellectual property management.However, most Chinese NARIs have guidelinesand rules on IPRs that are understood by employ-ees and management, although the approachesvary widely among institutes. Not surprisingly,institutes working on genetic transformation tendto have more experience with intellectual prop-erty management than those whose work is con-fined to conventional plant breeding.

The Indian Council of Agricultural Research(ICAR) also lacks a written intellectual propertypolicy, and ICAR’s constituent institutes look toCouncil headquarters for guidance and directionon these issues. On its website, ICAR has guide-lines for seeking patents, and it is issuing instruc-tions for DUS testing of extant varieties andregistration of germplasm. IPRs are currently man-aged with very limited resources by a small unit atICAR headquarters. Similarly, most Indian agri-cultural universities do not have an intellectualproperty policy.

Smaller NARIs are still developing their ownIPR policies. KARI, for instance, divides attentionto intellectual property issues between its lawyerand the head of its biotechnology center. InUganda, NARO recognizes that it needs staff withsome intellectual property expertise but is not con-sidering employing its own lawyer. Some institu-tions in Eastern Africa do have an intellectualproperty policy, developed under the guidanceof the Eastern Africa Regional Network onBiotechnology (BIOEARN); these policies tend toconcentrate on maximizing revenue.

REVENUE GENERATIONSTRATEGIESIPRs offer possibilities for public institutes to gen-erate revenue. The prospect of raising revenue iswelcomed by research administrators who have tocontend with inadequate public budgets, but thereis considerable uncertainty regarding both thelevel of income that can be expected and the effectsthat this revenue might have on research programs(box 6.1).

Revenues on varieties

Chinese research institutes have considerable ex-perience with revenue generation strategies. Manyprovincial crop research institutes had been sellingexclusive rights for hybrid varieties of rice and

maize to seed companies before the introduction ofPVP. On the other hand, some institutes take re-sponsibility for their own seed production and relyon private companies for marketing only. TheCotton Research Institute (CRI) traditionally hasgenerated revenue by selling the rights to marketits seed, and the Institute for Vegetables andFlowers (IVF) has also generated revenue fromseed sales, relying on companies for marketing.The introduction of PVP has allowed institutes torequest higher prices for their varieties, and inmany cases auctions have been organized.

Another arrangement that does not necessarilyrequire IPRs is to collect revenue by selling sourceseed (breeder’s or foundation seed) of public vari-eties to seed producers. For instance, AndhraPradesh Agricultural University sells more than 70tons of breeder seed of its rice varieties every yearto private and public seed producers. Access topublic breeding lines in India is problematic, andmany companies hope that the new IPR regime willlead to greater public-private collaboration. In afew recent instances, however, public institutes oruniversities have entered into nonexclusive agree-ments that give seed companies access to breedinglines, following guidelines set down by ICAR forsuch contracts.

In most cases, NARIs will stand a better chanceof attracting licensees if they offer exclusive accessto their varieties or breeding lines, but even if it canbe demonstrated that an exclusive license providesthe most effective delivery route for a variety, suchan arrangement may clash with the expectationsof public service. The KARI administration favorsnonexclusive licensing arrangements for this rea-son, and it lost the chance to license one of its maizehybrids to a company because of the exclusivityissue. In India, a strong public service traditionmakes it unlikely that very many public varieties orbreeding lines will be assigned on an exclusivebasis, and ICAR believes it has an important role incounteracting trends towards concentration in thecommercial seed market.

The potential for generating revenue throughroyalties on public varieties and sales of breedinglines varies by crop and by country. In countriesthat have large, technically proficient public breed-ing programs and diverse, well-developed com-mercial agricultural sectors, NARIs will certainlyhave things to offer. Even in these cases, the pro-portion of the budget that can be covered from suchsales may still be quite low.



An additional possibility for NARI plant breed-ing programs to generate revenue is through inter-action with MNCs. In such cases, the NARIprovides germplasm in return for a share of royal-ties on any varieties eventually marketed (nation-ally or internationally). Several international seedcompanies are active in India, and in a few casesthey have simply purchased nonexclusive access topublic breeding lines. Once the PBR legislation is inplace, these interactions may be strengthened andformalized. In Kenya, KARI has an agreement withMonsanto to provide maize and cotton breedinglines for possible genetic transformation, in returnfor a share (as yet unspecified) of royalties on anytransgenic varieties that are ultimately developed.

Patents

The patenting of innovations is an additional mech-anism for NARIs to generate revenue. Among the

case study countries, China’s NARIs have the mostexperience with patents. The BRI owns approxi-mately 10 patents and has another 40 applicationspending, of which 2 have been submitted for over-seas protection under the PCT. The BRI has pat-ented two Bt genes and commercialized them incotton varieties through a joint venture withBiocentury Transgene Technology. Although therevenues have been much less than expected (diffi-culties in enforcing the patent have led to the emer-gence of a large black market for Bt cotton seed),BRI currently generates about 15 percent of its in-come from patents and expects to increase thisshare significantly in coming years.

India’s public agricultural research instituteshave limited experience in patenting, and policiesand modalities are still being established.However, there is growing experience in patentingplant-based products and processes for pharma-ceutical uses (locally and abroad). The NBRI used

Box 6.1 Licensing Public Varieties

Source: Authors.

Kenya has a well-established PVP law, but there arefew examples of revenue generation by the publicsector to date. An important factor is the continuinguncertainty about the ownership and protection ofmany of KARI’s older varieties, which have been theexclusive province of the KSC. Another factor is thatvery few KARI crop varieties aside from maize hybridsare of interest to the private sector. The barley vari-eties used by the beer industry are an exception: KARIhas entered into a nonexclusive agreement withKenya Breweries, which pays a 2.5 percent royalty onthe value of the seed of KARI barley varieties that thecompany provides to its outgrowers. As a result of thebrewery’s support for barley breeding, PVP is beingsought for several new barley varieties, with KenyaBreweries and KARI as joint owners. Although KARItendered 16 maize hybrids in early 2004, with theexpectation that various seed companies would bidfor production rights, the outcome was disappointing.Only three of the hybrids were contracted, in eachcase to very small seed companies.

In Uganda, NARO recently licensed different maizehybrids and OPVs to four different companies thatwere willing to enter into contracts and agree to payroyalties, even though there is no PVP in Uganda.

NARO’s legal advisors believe that NARO candemonstrate ownership of these hybrids, and in anycase the country’s mandatory seed certification lawwould make it difficult for another company to sellseed of these varieties.

In Brazil, Embrapa has collaborated with the pri-vate seed sector since 1989 to market its maize OPVsand hybrids. Access to the varieties is mediated by aconsortium of small- and medium-sized seed compa-nies, and the royalties received by Embrapa make animportant contribution to the operating costs of itsmaize program (Garcia 1998).

Colombia has several examples of privately fundedcommodity research. The cotton growers’ associationprovides some funding for cotton breeding to COR-POICA (the Colombian Corporation for AgriculturalResearch, an independent corporation created by theColombian government as part of its effort to privatizeresearch). The growers’ association agreed that royal-ties would go to a fund for cotton research. Given thatPVP is well established in Colombia, there are surpris-ingly few examples of contracts between CORPOICAand the private sector. One of the problems is thatmany public varieties are OPVs (beans, maize, wheat,oats) that are of little interest to the private seed sector.

this experience in the international patent applica-tions for its Bt genes, which have not yet been com-mercialized. One commercially successful caseinvolves a method for detecting the Bt gene in aplant, developed by a scientist at the CentralInstitute of Cotton Research (CICR). ICAR didthe paperwork to acquire an Indian patent and(through PCT) to pursue patents in several othercountries. The detection kit is being marketed by anIndian firm, and royalties go to CICR. Althoughthis is a success story, the public system has no in-stitutional mechanism for pursuing patents orsharing costs and royalties, and there are caseswhere scientists in agricultural universities are leftto their own devices to pursue patents.

Incentives for individual scientists

A particularly important administrative issue forNARIs is the degree to which royalties are sharedwith individual scientists. Staff promotion is gen-erally determined by a fairly complex set of criteria,usually including research productivity, publica-tions, and service to the institute. For breeders, thenumber of released varieties is often an importantcriterion. As NARIs begin to earn royalties fromprotected varieties, breeders may also sharedirectly in the financial benefits. NARIs are ap-proaching this issue in various ways.

Chinese NARIs have the broadest experience inearning royalties through commercial seed sales,and breeders generally are given a “bonus” relatedto the level of royalties received. This practice wascommon even before the introduction of PVP. TheBRI receives one-third of the net revenues from itsjoint venture with Biocentury, with half of thisamount going to the research group that developedthe Bt cotton genes and 10 percent to the individualscientists. The provincial academies of agriculturalsciences and their institutes have developed theirown approaches to revenue sharing, although gen-erally they seek to ensure that not only breeders butalso other staff benefit from the royalties.

In Brazil, researchers in public institutes may beentitled to as much as one-third of the revenuesearned by their institute’s protected inventions. InKenya, KARI has yet to establish a policy, but it isunder pressure from the Kenya Plant BreedersAssociation to accept a formula for dividing royal-ties (based on the type of crop) with the breeder; theassociation is even lobbying to have this formulaincluded in the revised Seed Law to apply to both

public and private sector breeders. The director ofKARI acknowledges that deciding how to divideroyalties within the Institute, between and amongprograms, is a significant management challenge.

ENFORCEMENTAnother administrative challenge for NARIs wish-ing to take advantage of IPRs is the investment re-quired to enforce agreements. If a NARI sells orlicenses a protected variety or technology for afixed fee, then enforcement is not its problem (al-though possibilities for enforcement can affectwhat a company is willing to pay for access to a va-riety). But royalty collection assumes a capacity forenforcement.

The issue is similar in public research institu-tions in the North, where various strategies are fol-lowed. Early biotechnology inventions, such asparticle gun technology, were provided under anexclusive license that required just one negotiationand relieved the owner of the invention (in thiscase, a university) from further complex intellec-tual property management and royalty collectiontasks. The limitations of exclusive licenses caused anumber of U.S. universities to join forces in intel-lectual property management under the PublicIntellectual Property Resource for Agriculture(PIPRA), which intends to support both commer-cial and humanitarian applications of technology.The management of PVP for publicly developedvarieties is often complex because different seedproducers want to market the varieties. For exam-ple, the Wageningen University and ResearchCentre employs several marketing staff to lookafter the commercial interests of the Centre’s straw-berry varieties.

In China, rice breeding institutes that are ori-ented towards generating revenue either sell or li-cense their varieties to seed companies, in whichthey may even have an ownership share. Althoughsome institutes have considerable experience inenforcing their rights, others that have recentlyacquired their first PVP titles do not. The IVF ac-knowledges that difficulties in enforcing PVP werea major factor in its decision to continue exclusivelywith hybrids. Staff from the CRI are deployed tocheck local shops for illegal seed of their cottonvarieties, but this strategy is only partly effective,because illegal copies of CRI’s Bt cotton varietiesare readily available, even in Anyang, where theInstitute is located. In other countries, NARIs have



little experience with enforcement, but NARI ad-ministrators acknowledge that extra effort willhave to be devoted to establishing agreements withseed companies, collecting royalties, ensuring thatadequate seed certification and/or sales data areavailable to verify seed quantities, checking forunauthorized sales, and pursuing violations.

PUBLIC SEED PRODUCTIONNARI seed production

As an alternative to contracting with private seedcompanies, NARIs may choose to produce andmarket seed themselves. Despite several decades ofgenerally unhappy experience worldwide withpublic seed production schemes, the problems ofinteresting private companies in seed production(even under strengthened IPR regimes), combinedwith pressure on NARIs to demonstrate a capacityto generate revenue, have encouraged severalNARIs to consider their own seed productionstrategies (box 6.2).

The situation in China is particularly complex,as many research institutes are expected and alsohave clear incentives to generate a significant pro-portion of their own budgets. To maintain controlover parent lines, the IVF has always undertakenits own production of vegetable and flower seed,which it sells through retailers. In the cases of cot-ton and rice, incentives for generating income haveled some research institutes to establish their ownsubsidiary production and marketing companies.

Smaller institutes like the Tianjin CucumberResearch Institute have been formally turned intosuccessful commercial enterprises. In other cases,contracts granting exclusive access to new varietiesare negotiated with companies that have a specialrelationship with the institute.

Other public seed production

Public sector seed enterprises have generally de-clined in developing countries during the pastdecade. The advent of IPR regimes may further af-fect the viability of this sector.

India’s state seed corporations concentrate al-most exclusively on the production of public OPVs,although the public sector still produces some hy-brid maize seed. (The Maharashtra State SeedCorporation is an exception in having its ownbreeding programs in several crops.) As long asstate universities and ICAR institutes continue tosell breeder’s seed of their varieties to all seed en-terprises, most state seed corporations may experi-ence little change from PVP. Independent of PVP,state seed corporations are increasingly challengedby private sector activity. For instance, privatecompanies now supply more than half of the seedof public rice varieties in Andhra Pradesh.

In Kenya, the fate of KSC, which has operatedfor many years as a successful commercial enter-prise with majority shares held by the government,has yet to be decided. Although KSC continues todominate the market, management problems andirregularities in recent years have left doubts about

Box 6.2 NARI Seed Production Units

Source: Authors.

KARI established a Seed Unit to ensure that sourceseed of KARI varieties was readily available to seedproducers. An important rationale for creating theSeed Unit was the concern that seed of many “or-phan crops” was unavailable to farmers, becausecommercial seed enterprises took little interest inthose crops. It was thought that a more transparent,efficient facility for producing source seed wouldhelp generate commercial interest and foster smallerseed enterprises, but the Seed Unit also deals withhybrid maize in cooperation with small seed firms

and produces other commercial seed stocks (for ex-ample, potato seed). The Seed Unit has been an im-portant player in donor projects that support seedproduction by local producer groups, but it is unclearif any of these groups can survive commercially. InColombia, CORPOICA has taken a similar route byestablishing a Seed Production Unit that primarilyundertakes seed production as part of its public taskbut also produces some commercial seed. The unit isnot always reimbursed by the government programsthat request the seed.

its role and even about the degree of public owner-ship. The company has lost its previous monopolystatus, but many express the belief that the govern-ment will still look to KSC as a guarantor of maizeseed sufficiency, and as such the company wouldexpect certain concessions. PVP on its establishedhybrids could provide KSC with some valuable as-sets to maintain its strong position in the market.

NARI PLANT BREEDINGPRIORITIES AND STRATEGIESResearch investments

The pursuit of royalties for the use of public vari-eties and breeding lines may have important im-plications for the nature of public plant breeding.Certain crops are much more likely to attractcommercial interest than others, raising concernsthat the possibility of earning royalties may shiftNARIs’ resources to the more commercially attrac-tive crops, even though such a shift might not be inline with their mandate for agricultural develop-ment and poverty reduction. Because the privateseed industry values hybrids and other seed withcommercial potential, NARIs that respond to de-mand from commercial seed producers may shifttheir focus away from less commercial seed cropssuch as beans, cowpea, cassava, and millet andtowards more commercial crops such as maize,sunflower, and vegetables. Similarly, research pri-orities within a particular crop may shift from solv-ing constraints to smallholder agriculture toincreasing output in commercial agriculture, witha corresponding shift from OPVs to hybrids. Anexamination of crop portfolios, breeding objectives,and breeding methods in NARIs gives some indi-cation of these trends, although these shifting pri-orities cannot be attributed solely to the advent ofan IPR regime. Most NARIs find themselves underincreased pressure for cost recovery, and the ex-ploitation of IPRs is considered a potentially im-portant strategy for achieving that goal.

The case of NARO presents an interesting ex-ample. Uganda’s new agricultural policy empha-sizes that agricultural research is to be clientoriented and market driven. NARO now sees itsprincipal role as contributing to the development ofcommercial agriculture in Uganda and is preparedto allocate its resources accordingly. This new pol-icy means that priority will be given to such cropsas hybrid maize (with the possibility of earning

royalties on seed). It also means that priority will begiven to any crop for which demand is evident, forexample through donor funding for research.Although NARO has released a number of bean va-rieties, and several are produced on a modest scaleby private seed companies (often for sale to reliefagencies), no seed company is yet willing to investin seed production for climbing bean varieties. Itremains to be seen if this situation will result in di-minished investment in climbing bean breedingwithin NARO. The emergence of PVP in Ugandathus reinforces a broader, commercially orienteddirection for NARO.

Agricultural development policy is less well de-fined in Kenya, but KARI currently assigns highpriority to crops from which it can earn revenue.The fact that past KARI research produced many ofthe maize hybrids that are planted on more thanhalf of the country’s maize area gives KARI confi-dence that hybrid maize will be a major revenueearner, once new hybrids can be offered to the seedcompanies operating in the country. The implica-tions for other crops are less clear, although KARIleadership acknowledges its public service man-date and recognizes that Kenyan farmers grow arange of crops that do not figure in current seedcompany portfolios.

It is difficult to predict how PVP legislation inIndia will affect the relative distribution of researchinvestment across crops. At present there is no in-dication that research administrators plan to adjusttheir portfolios because of potential royalties. ICARadministrators believe that any royalties will be re-mitted to ICAR headquarters (and to the Treasury),thus limiting incentives for shifting priorities infavor of royalty-earning crops. Administrators ofstate agricultural universities emphasize theirmandate to serve state farmers, which sometimesleads them to give less emphasis to hybrid devel-opment (in rice or vegetable crops, for example).

As noted, many crop research institutes inChina generated revenue from sales of varietiesor seed long before the advent of PVP, so the im-pact on research priorities may be limited.However, government funding of some insti-tutes depends on adoption targets. For example,the Rice Research Institute of Guangdong re-ceives extra financing based on the area sownwith its varieties. Despite that, the Institute isconcentrating more on hybrid varieties becauseof the potential for generating income. The CRIhas a mandate to develop open-pollinated cotton



varieties for poorer farmers. The IVF, however,concentrated on hybrid varieties and revenuegeneration even before the introduction of PVP.

The orientation of public research towards theneeds of smallholder farmers, which gained specialattention in the 1980s, has led to a wide range ofparticipatory research processes, including partici-patory plant breeding (Sperling et al. 2001;Almekinders and Louwaars 2002). Most NARIslack policies that define ownership or benefit shar-ing arrangements for varieties developed throughparticipatory approaches. When revenue collectionbecomes a guiding principle in NARIs’ researchmanagement, it is not certain whether NARIs willcontinue to invest in approaches that feed only intolocal seed systems. In such cases, NARIs may con-sider participatory programs only if they attractdonor funding.

Access to patented technology

NARIs need to think much more carefully aboutthe implications of their use of protected technol-ogy. Researchers in most NARIs use patented tech-nology for activities such as marker assistedselection or genetic transformation. Few varietiesor other products have yet to emerge from thiswork, but only a minority of bench researchers areaware of the implications of using protected tech-nology. NARIs in the study countries rarely com-mission (or have the capacity to undertake) anintellectual property audit. Frequently their free-dom to operate is not clear, and other potential con-sequences of using patented technology are notunderstood or addressed.

The country case studies found two very distinctattitudes in laboratories towards third-party intel-lectual property: overapprehension and ignorance.An example of the former attitude is that some in-stitutes in ICAR now insist on prior permission forthe use of intellectual property in research, includ-ing the freedom to commercialize any innovationsthat are developed. On the other hand, a 1998 sur-vey of agricultural research organizations in Brazil,Chile, Colombia, Costa Rica, and Mexico foundwidespread use of proprietary biotechnology toolsand processes but relatively little knowledge of theIPR implications (Salazar et al. 2000).

When NARIs enter into formal agreements toacquire protected technology, they may or may notbe able to bargain effectively. In Kenya, KARI en-tered into a contract for access to Bt technology. The

contract stipulates how the genes can be used andwho has rights to any inventions that are based onthe technology. It also prescribes that KARI willhave to use new versions of the technology (fromthe same supplier) as soon as they become avail-able. This limits KARI’s opportunities to use othersources of Bt technology, such as those that go outof patent. KARI entered into the contract to gettraining in the use of the technology and to developfuture scientific collaboration, even though man-agement knew that the patents on the technologywere not valid in Kenya. It is not clear if the poten-tial long-term obligations for KARI balance theshort-term value of this arrangement.

IMPACT ON IARCsIntellectual Property Policies in IARCs

The IARCs within the Consultative Group onInternational Agricultural Research (CGIAR) havelong been able to operate outside the intellectualproperty debate and produce international publicgoods that are freely available to primary targetgroups in developing countries and commercialusers in industrialized countries. The emergence ofIPRs in the biological sciences and their introduc-tion in developing countries are forcing the IARCsto reconsider their approach. The situation is fur-ther complicated by the shifting focus of theNARIs, which are some of the primary partnersand initial target groups for the IARCs within theCGIAR system.

All of the IARCs with crop breeding mandateshave written intellectual property policies, al-though some of these policies remain in draft formand their actual implementation is still evolving.Several IARCs now have their own lawyers,whereas others have given staff the responsibilityfor intellectual property management. The CGIARhas also established the Central Advisory Serviceon Intellectual Property to assist the IARCs andhelp share experiences and practices in intellectualproperty management.

Most of these IARCs have seen their principalrole as supporting NARI breeding programs.In many cases, the IARCs do not release theirown varieties; NARIs either test and releaseIARC materials or use IARC germplasm to de-velop their own varieties. Germplasm, both im-proved varieties and raw or genebank materials,is moved within and outside the IARCs under

MTAs. The MTAs that accompany genebank ma-terials are standard for all IARCs under theiragreement with FAO. These MTAs stipulate thatno IPRs can be claimed on the material in theform received. On the other hand, MTAs usedwith improved germplasm can vary, althoughthey only allow that rights can be taken out ifsuch protection can be shown to stimulate widerdistribution and use of the materials. The recipi-ent also may transfer the materials to third par-ties provided that the same MTA is used (or thesame provisions are maintained). This rule hasled to discussions about whether it requiresfarmers participating in on-farm testing of vari-eties to sign such agreements and whether it isfair for farmers to take responsibility for suchreach-through provisions themselves. The mainargument against such strict regulation is thatfarmer-to-farmer exchange of materials is aproven mechanism to reach remote and resource-poor farmers with improved materials. TheInternational Rice Research Institute (IRRI) hasintroduced MTAs for its farmer-cooperators.

There is a strong fear in several IARCs that theirregional nurseries, which share the best varieties(released or under development) among a consor-tium of NARIs for testing under different environ-ments, may collapse because members will notprovide their own materials when protection in allof the participating countries cannot be guaran-teed. This concern has arisen in response to the in-creased commercial attitude of several NARIs,supported by the rise of IPRs.

Different policies are observed by the IARCswith regard to the protection of inventions. Somepatent their inventions, either as part of joint re-search projects with private sector partners in theNorth or to facilitate future collaborative agree-ments. In all of these cases, the basic principle isthat the inventions must be available for small-holder farmers and be used for poverty alleviation.Another IARC—the International Center forTropical Agriculture (CIAT)—takes another route;many inventions are published, and CIAT intendsto make sure that all its critical inventions emergein patent searches as prior art by sending publica-tions to national patent offices abroad, notably theU.S. Patent and Trademark Office (USPTO). Thisstrategy is meant to keep IARC inventions in thepublic domain and to stimulate the use of theseinventions in further research. Such “defensivepublication” is only effective, however, when the

published descriptions are sufficiently broad sothat researching “around” the publication andpatenting the results becomes difficult.

One newsworthy application of intellectualproperty policy within the IARCs—covered in theinternational press—is CIAT’s intervention in aU.S. patent application for yellow (“Enola”)beans. The patent might interfere with CIAT’sbean program in Latin America, where yellowbeans are fairly common. In a wider context, thischallenge serves as an example that the CGIAR,with its open access to genetic resources, is willingto defend this access policy in a wider context. Theeffort and costs involved in challenging thispatent may serve as an example of how difficult itis for IARCs to deal with the protection of rightsrelevant for their work.

Interactions with Seed Companies

Most IARCs provide their breeding lines not just topublic organizations but also to private seed com-panies, usually under MTAs that prohibit the pro-tection of the lines as provided. As domestic seedcompanies in the South develop increased breed-ing capacity, and as they compete with increasingeffectiveness against public seed enterprises, theywill become an ever more important conduit forIARC research. The emergence of IPR regimes hasencouraged the IARCs to consider various newstrategies for interacting with the private seed sec-tor (boxes 6.3 and 6.4). Some continue to providematerials without charge, while others pursuepractices that involve either fees or royalties.Sometimes IARCs provide materials to the privatesector directly, while other transfers are mediatedby NARIs. In the case of maize, the InternationalMaize and Wheat Improvement Center (CIMMYT)provides germplasm to seed companies for use indeveloping their own commercial varieties. InSouthern Africa, CIMMYT licenses its hybrids andOPVs to private companies; the hybrids may be li-censed on an exclusive basis for a single country,but the OPVs are always offered on a nonexclusivebasis. CIMMYT takes responsibility for obtainingnational variety release in these cases but has notpursued PVP and does not collect royalties onthese varieties.

When CIAT developed a new variety ofBrachiaria (a pasture grass) called Mulato, it foundthat the most effective way of promoting its diffu-sion was to license seed production and marketing



to a company in Mexico (because of its commercialand technical capabilities). The Mexican companyin turn licenses local seed companies for distribu-tion in Colombia and several other Latin Americancountries. The Mexican company has to protectMulato in the name of CIAT in every countrywhere it intends to commercialize it, and it hasagreed to pay a royalty to CIAT on seed sales forthe first 10 years. A separate agreement provides

additional royalty payments to CORPOICA,which participated in the research to develop thevariety. The royalties paid to CIAT go into a spe-cial royalty fund.

IARCs’ access to protected technology

Like NARIs, the IARCs must also be concernedwith access to protected technologies. Several

Box 6.3 The Latin American Fund for Irrigated Rice

Source: Authors.

The Latin American Fund for Irrigated Rice (FLAR)was created in 1995 to fill the gap left by CIAT’s deci-sion to shift its rice breeding priorities towards virtu-ally exclusive concentration on marginal productionzones. FLAR currently has a membership of eightcountries (plus CIAT); the budget comes largely frommembers’ contributions. Each country has a singlerepresentative, which may be a NARI, a rice produc-ers’ association, or a group of seed companies. FLARmanages an extensive regional program of rice breed-ing, directed by its members. Although FLAR does notproduce finished varieties, it gives members access to

breeding lines at a relatively advanced stage of devel-opment (roughly the F5 or F6 stage). CIAT’s rice breed-ing program provides germplasm to FLAR, covered byMTAs. Each representative or constituent member ofFLAR is responsible for registering and protecting anyvarieties it produces from FLAR germplasm. FLARrequires that any varieties based on its germplasm beprotected under national PVP, but FLAR does notreceive any royalties or additional payments fromreleased varieties. Members can produce seed them-selves or license varieties to someone else andcollect royalties.

Box 6.4 Millet and Sorghum Commercialized through ICRISAT

Source: Authors.

The International Crops Research Institute for theSemi-Arid Tropics (ICRISAT) has given such valuablesupport to India’s domestic commercial pearl milletand sorghum seed sector that companies subscribe toconsortia to gain access to ICRISAT breeding lines andinbreds. The growth of the hybrid pearl millet andsorghum seed business is one of the great success sto-ries of seed market liberalization in India. Until re-cently, ICRISAT provided germplasm to any legitimateprivate company or NARI. In 1999, ICRISAT ap-proached private Indian seed companies to discussways in which they could support ICRISAT’s research,leading to the creation of two consortia (for pearl mil-let and sorghum). Each member pays an annual fee foraccess to breeding lines. The consortia include a

range of Indian seed companies, although some of thevery largest and smallest players in the hybrid pearlmillet and sorghum business are not members. A fewcompanies from other Asian countries are also in-cluded in the current membership. It is expected thatthe Indian companies will apply for PVP for the hy-brids they produce once India’s PVP law is opera-tional. Members are asked to provide sales figures toICRISAT in order to assess uptake and impact, but nofurther royalties or payments are expected. The sub-scriptions currently cover the entire cost of ICRISAT’shybrid pearl millet and sorghum breeding in India. Itshould be noted that NARIs in India still maintain fullaccess to ICRISAT’s breeding material, but the sub-scribers to the consortia do not see this as a threat.

commodity-focused IARCs have extensive biotech-nology research programs. Many of the tools andgenes they use are patented in the North. Some arespecifically licensed for research purposes, butthere is little experience on how to proceed withproducts based on such research (box 6.5). CIATbelieves that a transgenic, virus-resistant rice vari-ety it has developed is nearly ready for diffusionand has commissioned a freedom to operate (FtO)search, which identified the principal intellectualproperty holders with whom CIAT needs to nego-tiate. CIAT admits, however, that it is poorly pre-pared for such negotiations. Similarly, CIMMYTcommissioned an FtO search for its Bt maize vari-eties for Africa, but the next steps are still unclear.ICRISAT has developed a number of transformedcrop lines but has yet to do an FtO for commercial-izing any of them.

The IARCs also have little experience in patentingtheir germplasm-related innovations. CIAT has filedone patent jointly with Embrapa for a Brachiaria

transformation method, and another for a tissue cul-ture technique (for guanabana), but these have yet tobe granted. ICRISAT has yet to patent any technolo-gies, although there are several candidates. MostIARCs are developing their staff to identify whichresearch streams might result in patentable productsand hence require different management.

Recently initiated CGIAR Global ChallengePrograms are expected to yield a wide range ofpatentable technologies through collaborationbetween IARCs and institutes in developing andindustrialized countries. The Challenge Programsaim at making all protected technologies andmaterials available on a nonexclusive basis to allwho aim at using them to develop products for theresource-poor. The Generation Challenge Programintends to include a humanitarian license clause inits consortium agreement to avoid the negotiationof individual licenses. Such a clause would requireclear definitions for such terms as “resource-poor”(Barry and Louwaars 2005).


Box 6.5 IPRs for Striga Resistance in Maize

Source: Authors.

CIMMYT’s work in Kenya to develop maize varietiesto resist Striga, a parasitic weed, required considerableattention to IPRs. Research by the Weizmann Instituteand CIMMYT indicated that a herbicide coating forseed could effectively control Striga by killing theweed as it germinates in the soil. The innovationwould require maize varieties with herbicide resis-tance, and collaboration was initiated with BASF, theowner of a mutant gene that confers resistance to aherbicide produced by BASF. Because the technologydoes not involve a transgene, it does not requirebiosafety clearance, as is the case with most other her-bicide resistance traits. BASF facilitated access tomaize germplasm containing the gene, and CIMMYTbegan to develop IR (imidazolinone-resistant) maizevarieties suitable for conditions in Western Kenya.

Three IR maize hybrids have passed Kenya’s varietyapproval tests. IR maize is one of the first projects forthe newly formed African Agricultural TechnologyFoundation (AATF), which has taken responsibility forregulatory and commercial arrangements for IR maize.BASF initially granted access to the IR gene forresearch purposes. An agreement is being negotiatedto allow its use in commercial varieties for Kenya.AATF has agreements with three seed companies inKenya to produce the IR varieties, and royalty pay-ments are likely to be managed by AATF (rather thanCIMMYT or KARI). One IR hybrid underwent exten-sive field testing and demonstration in 2005. The IRvarieties will be subject to PVP in Kenya; it is not clearhow the IR gene itself would be protected, if this wereseen to be desirable.

45

The pressures to strengthen IPRs in plant breeding in developingcountries present both immediate and long-term challenges to policymakers and donors. The immediate challenges are related to framingand implementing appropriate legislation that is consistent withTRIPS and that supports national agricultural development goals. Aspart of meeting these challenges, countries will need to develop suit-able responses to pressure exerted in negotiations of bilateral tradeand investment agreements to go beyond the minimum requirementsof TRIPS. The longer-term challenges are derived from the fact thatan IPR regime, on its own, is not likely to provide the incentives thatelicit the emergence of a robust plant breeding and seed sector.Attention to other institutions and the provision of an enabling envi-ronment are also necessary.

This chapter examines ways of addressing these two sets of chal-lenges. Because most of the responsibility is with stakeholders them-selves, the first part of the chapter outlines priorities for policymakers. The chapter concludes with a summary of possible inter-ventions that the World Bank (or other donors) might undertake tohelp support the establishment of an appropriate legal frameworkand the development of requisite institutions.

CHALLENGES FOR NATIONALPOLICY MAKERSPVP legislation

IPR regimes for plant breeding in developing countries demand ur-gent attention. Policy makers need to ensure that they have an IPRregime that is relevant to national conditions and thus supports thegrowth of the seed sector, but the regime must not be so restrictivethat it limits future development options or proves unenforceable.Although TRIPS allows for the possibility of patents for plant vari-eties, patents are not a suitable alternative for developing countries,which should focus on establishing a sui generis system of PVP.

The design of a suitable PVP regime will necessarily represent adialogue and a series of compromises among various stakeholders,including the commercial seed industry, public agricultural research,and farmers. To be effective, the PVP system must elicit broad-basedsupport, implying that the formulation of supporting legislation andregulations should be the product of open public debate. Even if leg-islation is already in place, many developing countries will find that

Lessons7

there are sufficient options for interpretation andapplication to warrant a thorough review of proce-dures and priorities.

Because PVP legislation must respond to the cir-cumstances of a particular country and representconsensus among a range of stakeholders, it is notpossible to provide a blueprint that policy makerscan follow. Models are available (particularly theUPOV Conventions), but even these include a num-ber of options that demand the careful attention ofpolicy makers. The provisions of the 1978 UPOVConvention generally meet the TRIPS require-ments, yet now UPOV requires that new membersjoin under the 1991 Convention. Several options,discussed below, deserve careful considerationbefore a decision is made to use UPOV 1991 as amodel for national legislation. They include the lev-els of seed saving and seed exchange, the scope ofprotection, the breadth of coverage, and the relationof PVP legislation to the concerns of Farmers’ Rights(for further details, see Appendix C).

Seed saving. UPOV 1978 places no restrictions onfarmer seed saving, while UPOV 1991 prohibitsseed saving but allows countries to introduce spe-cific exemptions, “taking into account the legitimateinterests of the breeder” (see table 2.1 for a compari-son between UPOV 1978 and 1991). The politicalrepercussions and enforcement requirements of aseed saving restriction make it a candidate forconsideration in only a small minority of cases indeveloping countries. In cases where industrializedcountries prohibit seed saving (for example, in theEU), there is usually a small-farm exemption, andeven so the experience has been that royalty pay-ments on farm-saved seed are often difficult toenforce. Thus when a developing country frames itsPVP legislation, rather than allowing a blanket pro-hibition on seed saving, it must be able to defend—and demonstrate how it will enforce—any res-trictions on seed saving in specific instances (for ex-ample, export horticulture or particular field cropsgrown by large-scale commercial farmers).

Seed exchange. Seed exchange is less amenable toprecise definition than seed saving. AlthoughUPOV 1978 is interpreted to allow seed exchangeas part of the farmer’s privilege, UPOV 1991 ex-plicitly forbids the practice and offers no possibili-ties for exemption. The term “seed exchange”covers an exceptionally wide range of practices. Atone end of the scale, resource-poor farmers whofind themselves without seed at planting time maybeg or borrow seed from a neighbor; legislating

against such a practice is both inappropriate andpointless. At the other end of the scale, larger-scalefarmers may earn considerable income throughinformal sales of saved seed, threatening the via-bility of local seed enterprises. For these reasons,national PVP legislation needs to be very careful inrespecting local customs of seed provision whileguarding against the possibility of large-scale seedproduction in competition with legitimate seedcompanies. In many cases, conventional seed law(which requires registration of seed companies ormandates seed certification) is a better way to ad-dress this problem than trying to restrict seed ex-change through PVP.

Scope of protection. National PVP legislationconsistent with UPOV should have little difficultyensuring that protected varieties are available forresearch and further breeding. UPOV 1991 in-cludes additional rights on EDVs and extends pro-tection to the harvested product of a protectedvariety, but these modifications need not causesignificant problems for IPR legislation. It is moreimportant that policy makers are aware of the cur-rent debate in which some MNCs are proposingfurther restrictions on the use of protected varietiesin breeding programs. These positions may betranslated (for example, through bilateral tradenegotiations) into pressure for correspondingprovisions in PVP legislation in developing coun-tries. Developing country policy makers mustensure that such pressures are not used as anexcuse for establishing excessive restrictions onplant breeding and should defend researchers’access to protected germplasm in a manner con-sistent with UPOV 1991.

Breadth of coverage. The coverage of PVP legisla-tion also needs to be considered. Although UPOVprovides for the eventual protection of all species,the Conventions allow coverage to be introducedincrementally. Policy makers should take advan-tage of this flexibility when introducing PVP. Itmakes sense to begin with crops for which the seedindustry or agricultural markets will benefit mostfrom PVP, building experience and graduallyexpanding the coverage to other crops. The treat-ment of extant varieties also deserves attention.Attempts to extend excessive protection to varietiesalready in farmers’ fields (especially if their owner-ship might be contested) may unnecessarily com-plicate the implementation of PVP legislation.

Farmers’ Rights. There is no provision in theTRIPS Agreement for issues such as benefit sharing


Lessons 47

(which forms part of the concept of Farmers’ Rightsunder the IT PGRFA) or the widely discussed pro-tection of farmer-bred varieties. The inclusion ofthese issues in PVP legislation or in national lawson biodiversity is controversial but must be ad-dressed. Whether or not the concept is included inPVP legislation, it is important to ensure that vari-ous types of legislation are consistent. The conceptof Farmers’ Rights should not create any major con-fusion with regard to seed exchange or sale or thenovelty requirement for a new variety. A compul-sory declaration of the source of the materials in ap-plications for PVP and patents is considered a goodlink between IPRs and genetic resource rights byproviding important information that is needed toencourage benefit sharing. On the other hand, theestablishment of rights to a local variety may ham-per broader access to useful local germplasm,which critics of PVP argue is the case for protectedmodern varieties.

Models for PVP legislation. An IPR system forplant breeding must chart a careful course betweenproviding sufficient incentives for investment inresearch and seed production while protectingseed security for resource-poor farmers. There is noneed to establish an exceptionally rigid or compre-hensive IPR regime in the early stages of seedsystem development. Commercial seed systemsusually begin with products that are difficult forfarmers to save (hybrids, vegetables) and thatgenerally require little intellectual property protec-tion. As the seed industry matures and farmersrecognize the value of commercial seed, companiesoffer a wider range of products, some of which mayrequire attention to IPRs. Seed industry develop-ment usually parallels the growth of agribusiness,and markets for particular commodities may de-mand specific attention to IPRs.

There is considerable pressure on countries toestablish legislation that is consistent with a UPOVConvention, and there are a number of strongarguments for following this advice, including theadvantages of participating in a harmonized sys-tem for characterizing new varieties and beingable to take advantage of the considerable techni-cal advice and expertise that UPOV and its mem-bers can offer to developing countries. However,given that the 1991 UPOV Convention is now theonly option available to further entrants, policymakers must carefully consider the costs and ben-efits, as well as the remaining flexibility, of this sys-tem. For instance, policy makers must recognize

that legislation consistent with UPOV 1991 pro-hibits farmers from providing seed of protectedvarieties to their neighbors under any circum-stances. On the other hand, carefully designed leg-islation can exempt specific crops (and/or types offarmers) from restrictions on seed saving, provid-ing the possibility for a more targeted approachrelevant to the circumstances of smallholder farm-ers. The major parameters in the design of a PVPsystem and their relation to UPOV 1991 are sum-marized in table 7.1.

Even within countries, different seed systemshave different requirements for protection. Legaloptions may be considered for tailoring IPRsystems to such complex conditions. Strong pro-tection may be provided for export agriculture,and weak or no protection to noncommercial sec-tors that primarily cater for subsistence farmers.When agricultural development proceeds, certaincrops or conditions may gradually be broughtunder strengthened regimes.

The administration of PVP

Although many developing countries have draftedlegislation to address PVP requirements, relativelyfew have begun to implement PVP, and little guid-ance on appropriate strategies is available. This sec-tion looks at some of the key decisions facingagricultural policy makers in the implementationof PVP. No matter what model of PVP is adopted,policy makers also need to consider the costs andenforcement of the system.

The costs of PVP. The establishment of an effectivePVP system goes well beyond drafting and passinglegislation. A PVP system requires the creation of anadministrative office and possibly variety testingfacilities, which entail considerable investments offinancial and human resources. Some countries willfind it difficult to identify staff with sufficient scien-tific and legal skills for such tasks, and the opportu-nity cost of redeploying trained personnel (forexample, the release of experienced plant breedersfor variety testing) must be considered. Policymakers must carefully examine how the costs ofestablishing a PVP administration can be mini-mized. Several areas deserve attention.

• Cost considerations strengthen the argumentfor a targeted approach to PVP coverage thatconcentrates first on priority crops and areas,gradually develops competence, and extendsthe breadth of crops eligible for protection.

• It is important to explore opportunities forharmonization and cooperation, which canreduce costs for both the PVP authority andthe applicants. Using standard criteria forprotection (such as the UPOV criteria) anduniform test guidelines could offer significantadvantages, particularly for countries withrelatively small plant breeding sectors. Testreports from other countries could be used,DUS testing can be assigned to particularcountries in a region, or regional PVP certifi-cates can be issued. All of these options couldrepresent a significant savings and would

promote a more effective PVP applicationsystem, irrespective of the type of protectionsystem that is adopted.

• A PVP authority can also assign part of theresponsibility for testing varieties (DUS) tobreeders themselves, which will save somecosts. However, this alternative may putsmaller domestic plant breeding firms at adisadvantage, and thus some flexibility mustbe maintained.

• Attention should be given to establishing anappropriate fee structure for PVP. Unfor-tunately, no comprehensive guidance exists for


Table 7.1 Key Parameters in the Design of a PVP System

Arguments for a Arguments for a less Parameter restrictive interpretation restrictive interpretation Relation to UPOV 1991

Seed saving A country may not attracthigh-value export crops, such asflowers, if seed saving for thesespecies is not restricted.

Saving seed of field crops is partof farming practice. It is verydifficult to enforce seed savingrestrictions in these cases.

If a crop is not specificallyexempted in national legislation,UPOV 1991 imposes seed savingrestrictions.

Seed exchange Widespread informal sale of seedof protected varieties (especiallyby large-scale commercialfarmers) is a disincentive tocommercial seed activity.

Seed exchange and informalsales among small-scale farmersis customary and difficult tocontrol. Large-scale informalseed sales can be controlled byappropriate seed regulation.

Legislation consistent with UPOV1991 does not allow any type ofseed exchange of protectedvarieties among farmers.

Scope of protectionof germplasm forbreeding

Restrictions on EDVs discouragecopy-cat or cosmetic breeding.(Some MNCs wish to limit anyuse of protected varieties inbreeding programs.)

Both public and private plantbreeding in developing countriescan make effective use ofprotected germplasm, and unduerestrictions would hamper theirproductivity.

The use of protected varieties infurther breeding is supported,with the exception of EDVs.

Breadth of coverage:number of species

TRIPS expects that all specieswill be eligible for protection.

A gradual introduction ofprotection allows PVP authoritiesto address priorities and gainexperience.

UPOV 1991 requires initialprotection of at least 3 genera orspecies, with phased expansionto at least 24 in an 8-year period.

Breadth of coverage:extant varieties

Providing protection to extant(usually public) varieties mayserve as a reward for past plantbreeding efforts, allow NARIs toarrange for private seedproduction, and provide incomefor NARIs.

Excessive privilege assigned toold public varieties may actuallybe a disincentive to furtherbreeding.

UPOV 1991 makes nodistinction for extant varieties butallows their protection.

Farmers’ Rights There are arguments forincluding Farmers’ Rights withina single piece of legislation.

Farmers’ Rights can be coveredin separate legislation. There areno examples to date of successfulPVP-type rights for farmervarieties, and enforcementproblems would be considerable.

UPOV 1991 makes no provisionfor Farmers’ Rights.

Source: Authors.

Lessons 49

doing so. While cost recovery is certainly aworthwhile goal, it must also be balancedagainst the dangers of excluding applicationsfor crops with relatively small seed markets orvarieties from companies or institutes thatcannot afford large fees. Many PVP systemsestablish a uniform fee schedule for all crops,but this is not the only possibility. Fees may bebased on the actual cost of evaluation (whichmay vary between crops), the value of the pro-tection (higher fees for crops with larger com-mercial seed markets), or the type of applicant(with discounts for crops and varieties directedtowards resource-poor farmers). Subsidiescould be also be considered, at least initially, topromote particular types of plant breeding, butpolicy makers must be able to justify such useof public funds. See table 4.3 for examples ofcosts of PVP applications and maintenance.

Enforcement. Often the enforcement of PVP entailsconsiderable problems, which is another reason tointroduce PVP in a gradual manner. Private com-panies and public institutes that lobby for the es-tablishment of PVP must be made aware that mostenforcement responsibilities will fall on their shoul-ders. Experience to date indicates that enforcementdifficulties can undermine confidence in a PVPsystem. The difficulty (and political sensitivity) ofenforcing rules on the saving or local exchange ofseed, for instance, provide an important argumentfor caution in the initial stages of PVP. Even in casesinvolving competing commercial firms, courts areoften unprepared to interpret the infringement,particularly because of the biological nature of theprotected subject matter. Implementation of IPRregimes must therefore include attention tostrengthening the judicial system’s knowledge ofIPRs in plant breeding. Attention is also requiredfor promoting a business environment in whichcontracts are expected to be enforced. Private firmswill need to develop their own capacity to monitorthe market and to seek legal recourse wheninfringements are detected, and public researchinstitutes that hope to earn royalties from theirprotected technologies must be prepared to investin monitoring and legal resources.

A PVP system will not meet its goals if it is notsupported by the full range of stakeholders.Breeders, seed producers, traders, and farmersneed to understand the objectives of the system inorder to comply with the rights and obligations

associated with it. The development of a PVP sys-tem should thus include an extensive informationcampaign involving all stakeholders, including thelegal profession. Developing judicial experience inPVP may take some time.

Protecting biotechnology

Patents. Although plant variety patents are not areasonable option for developing countries, a num-ber of issues related to IPRs in biotechnology justifyattention to national patent regimes and their im-plementation. Many developing countries havewell-established patent offices, but only a few havethe experience and human resources to deal withpatents related to plant breeding and biotechnol-ogy. Most national patent offices will need to buildtheir capacities to deal with patents related to agri-cultural biotechnology, to provide clear guidelinesabout what can be patented, and to define the scopeof the protection. If a country hopes to introducetransgenic varieties, it will need to establish legis-lation that provides adequate protection, althoughthis protection does not necessarily have to dependon the patent system. Several possibilities exist,such as allowing patents on classes of transgenicvarieties without establishing patent rights on in-dividual plant varieties, which is the approachtaken by the EU. (In several EU countries, thefarmer’s privilege and breeder’s exemption fortransgenic varieties are valid, even when the scopeof a patent would normally disallow them.) Inmany cases, however, providing credible enforce-ment for the right combination of biosafety regula-tion, seed laws, and PVP may offer adequateprotection for transgenic varieties, at least in theirearly stages of diffusion in developing countries.

Biosafety. Biosafety regulation can help limit themisappropriation of transgenic germplasm, but itis unwise to expect that biosafety authorities willassume responsibility for enforcing IPRs. Althoughthe establishment of a competent biosafety author-ity is a priority for countries that wish to use trans-genic crops, it is equally important to identify aclear division of responsibilities between biosafetyauthorities, seed regulators, and IPR agencies.

Other incentives for seedsystem development

Policy makers must recognize that the develop-ment of a commercial seed sector depends on a

range of factors that extend well beyond IPRregimes. These factors cannot substitute com-pletely for an IPR regime, but they need to be ex-ploited as policy makers consider how to structureincentives for seed sector development. India, forinstance, has had a thriving and diverse commer-cial seed sector for more than two decades buthas only recently implemented PVP legislation.Uganda’s commercial seed sector is developingthrough a partnership between public research andprivate seed production, without the help of IPRs.

Seed regulation. Other regulatory capacities cancontribute to the performance of IPR regimes forplant breeding. In particular, it will be difficult to in-stitute an effective PVP system without an adequateseed regulatory framework, including clear rulesand procedures for variety registration and seedquality control. A well-administered procedure forreleasing varieties and an adequate system to con-trol seed quality can limit many instances of the mis-appropriation of plant varieties or genetic resources.The effectiveness of seed regulation depends oncompetent management, reasonable standards (con-sistent with enforcement capabilities), and strongindustry participation. It is important that policymakers concerned with IPRs ensure that an appro-priate national seed regulatory system is in place.

Commercial seed markets. Initial seed marketdevelopment is usually based on seed types thatare difficult for farmers to save, such as hybrid orvegetable crop seed. Once companies are produc-ing and selling high-value seed, they will have theexperience and infrastructure to expand into othertypes of seed, and once farmers have experiencewith using good quality commercial seed, they willbe more likely to broaden their seed demands. AnIPR regime should develop in parallel with thisevolution in seed markets, and policy makers needto ensure that the enabling environment (charac-terized by contract enforcement, the availability ofcredit, and so forth) is adequate for the growth ofthe domestic seed industry

Agribusiness development. In many cases whenpolicy makers want to support high-value exportcrops, they will need to ensure that adequate IPRsare in place. More restrictive PVP may be appliedselectively in particular cases when commercialincentives justify additional protection, such as incut flowers.

Public sector breeding. Many NARIs are uncertainabout whether to complement or compete with theprivate sector and hence are confused about how to

take advantage of PVP. Policy makers need to setclear guidelines in this area to ensure that NARIsfulfill their public service mandate. NARIs need todistinguish between using PVP in order to stimu-late the use and delivery of their varieties on theone hand and seeing PVP as a contributor to theirbudgets through the collection of royalties on theother. In addition, policy makers must recognizethat systems of international germplasm exchangeare being threatened by an almost exclusive focuson the possible financial advantages accruing to thecontrol of germplasm, with little appreciation ofthe importance of equitable access. In biotechnol-ogy research, most NARIs are not organized to usetheir own assets, such as varieties, breeding lines,and basic research capacities; to assess their free-dom to operate when they make use of protectedtechniques and tools; and to acquire access to com-plementary technology on equitable terms.

Protection may facilitate the development ofpublic-private partnerships in research, yet thisreport highlights a number of examples of howpublic research has cooperated effectively with theprivate seed sector without IPRs.

CHALLENGES FORTRADE NEGOTIATORSIPRs have become a topic on the international tradeagenda ever since the Agreement on TRIPS wasnegotiated and adopted of as part of the overallpackage of agreements leading to the creation ofthe WTO. TRIPS obliges all WTO members to offerspecified minimum standards of intellectual prop-erty protection in a wide range of sectors, althoughthe TRIPS Agreement also leaves developing coun-tries a certain amount of flexibility in how theyfulfill their obligations. This flexibility allows coun-tries to design IPR regimes that suit their specificcircumstances.

IPRs are a tool that can support agricultural de-velopment, if IPRs are tailored to the conditionswithin each country. Developing countries, withtheir diversity of farmers and seed systems, presentspecial challenges for designing a supportive IPRsystem. The goal should be to provide incentivesfor seed sector development through IPRs such astrademarks, trade secrets, and PVP, without creat-ing unnecessary or unrealistic limitations on thepractices and livelihoods of smallholder farmers.Meeting this goal requires a careful balancing ofrights and obligations, which may imply adapting,


Lessons 51

as opposed to simply adopting, the standard mod-els available.

The agricultural sector, and in particular plantbreeding, is one area where the flexibility offeredby TRIPS is quite broad. Yet pressures exist fordeveloping countries to go further than required byTRIPS, notably in bilateral trade negotiations anddiscussions in the framework of WIPO. Tradenegotiators need to realize that IPRs are primarilymeant to support innovation, and that the tradeaspect is secondary. Strengthened IPRs in breedingthus need to be justified on the basis of carefulassessment of the national breeding and farmingsectors if they are to play a positive role in agricul-tural development by providing incentives for bothdomestic and foreign investments.

Accepting patent protection for plant varieties ora sui generis system that complies with UPOV 1991as a bargaining chip in trade negotiations may not bevery helpful. While it is not essential for the initialdevelopment of a commercial seed sector, a prop-erly balanced combination of PVP, trademarks, andpatents may contribute to a fair and competitivebusiness environment that stimulates innovationand provides transparency for farmers. The use ofthe UPOV guidelines for testing new varieties,however, offers clear advantages. It opens the doorto accepting test reports from other countries and toinitiating regional collaboration on testing. Thesealternatives can lower costs for PVP agencies andapplicants, shorten the approval process, and facili-tate seed trade. The harmonization of criteria forgranting protection does not have to go hand-in-hand with uniform scope or coverage of protection;in fact, it maintains the option to refine and adjustthe system as the seed sector develops further.

Care should be taken that trade considerationsdo not dictate development pathways for nationalseed systems. If IPR systems are overambitious rel-ative to local needs and capacities, then they arelikely to lead to missed opportunities in seed sectordevelopment, to create implementation problemsthat undermine the system’s credibility, and to di-vert resources and attention from more importantpriorities. Admittedly the negotiation of interna-tional agreements has become a daunting task,given the range of issues put on the table at once.Governments need to find ways to ensure appro-priate consultation—for example, between differentministries. IPRs are typically under the jurisdictionof an economic ministry, but in the case of plantbreeding, the MoA will be an equally important

partner for consultation. It is also important thatconsultation and debate involve other stakehold-ers, perhaps first and foremost farmers, whoshould be the principal beneficiaries of the devel-opment of a commercial seed sector. A widerdebate on such decisions should improve under-standing and commitment in what is often seen tobe a controversial field.

CHALLENGES FORRESEARCH MANAGERS INPUBLIC INSTITUTIONSBefore giving their unconditional support to IPRsin plant breeding and their use in public agricul-tural research, research managers and policy mak-ers responsible for public research at the nationaland the international level must consider the po-tential impact on breeding strategies and on costsand benefits.

There are three main reasons for public researchinstitutes to embrace IPRs: recognition, technologyaccess and transfer, and revenue. IPRs formallylink a variety to a research institute and individualbreeders, thereby conferring recognition of theirachievement. With respect to technology transfer,the advent of IPRs may facilitate seed production ifonly an exclusive license will entice a commercialseed producer to take a new variety into its prod-uct range. There may also be expectations that tech-nology will be acquired more easily if patents canbe traded. Finally, IPRs can serve to recoup re-search investments by providing a legal basis forlicense contracts between breeders and seed pro-ducers, which would commonly include a royaltypayment. In public research, variety developmentis supported through public funds, and researchmanagers tend to emphasize other research objec-tives in addition to variety development (see thenext section). However, given the declining publicfunding of agricultural research in many countries,revenue generation is an attractive option for manypublic institutions. Income from IPRs can supportthe institute as a whole and help managers providefinancial support for particularly productive re-searchers or research groups.

Impact on breeding strategies

The introduction of the concept of revenue genera-tion in public plant breeding is likely to have an

impact on the distribution of funds within the NARIand on the breeding strategies applied. Since IPRscan be generated relatively easily in plant breedingcompared to other sciences, the pursuit of revenuecould cause other important disciplines to be mar-ginalized, such as soil science, social sciences, andplant pathology. Revenue generation will focusbreeding on commercial farmers and hybrids ratherthan on resource-poor farmers and OPVs, which areunlikely to generate profits for seed companies orroyalties for breeding institutions.

The shift to commercial crops and farmers maybe consistent with recent changes in national agri-cultural policy and trends of commercialization ofpublic entities in some countries. In other countries,however, the public task of NARIs is based on sup-porting both equity and national agricultural pro-duction. The trend towards crop diversificationand breeding for low-input agriculture may bereversed with a public research focus on using IPRsfor revenue generation. Another strategy forNARIs may be to secure a choice of varieties forfarmers in a market that may otherwise be domi-nated by large commercial firms because of IPRs.However, this latter strategy may shift researchpriorities away from smallholder farmers’ needs.

Policy makers and research managers need totake care in assessing the prospective impact ofIPRs in public breeding before including protectionin their research strategies. If NARIs are not sup-posed to protect their inventions, governments willhave to provide the necessary funds for research.

Impact on public research organizations

Protecting own intellectual property. When a NARIintends to commercialize its varieties using IPRs, ithas to realize that it needs the capacity to designcommercialization strategies and license contracts,as well as to follow up on these contracts. UsuallyNARIs are unaccustomed to employing marketingstaff and intellectual property specialists. Theirfocus on research means they have little experiencein attracting or administering appropriate person-nel to manage their intellectual property portfolio.

Research managers also tend to look at the ben-efits derived from IPRs rather than the costs. Asidefrom the cost of additional personnel, the directcosts of acquiring and implementing IPRs may besubstantial. Application and maintenance fees canbe considerable, and commercial decisions haveto be made to determine which rights to apply for

and which to surrender. An even more significantcost can arise when rights have to be defended,especially when the public sector confronts experi-enced negotiators from commercial companieswith significant resources. NARIs must be pre-pared to spend money on protecting intellectualproperty.

Managing third-party intellectual property. Evenwhen a NARI does not intend to protect its inven-tions, the introduction of IPRs may have a signifi-cant impact on the institute. NARIs will need todevelop ways and means to determine their poten-tial risks and freedom to operate with respect totechnologies that they use but which are patentedby others. The rights of the patent holder have to berecognized and consent sought in the researchstage or when research is leading to a product.Thus NARIs should develop an intellectual prop-erty plan for each project to decide when and howcontact will be established with the technologyprovider—that is, whether to ask for a research li-cense or wait until a product is developed; whetherto protect their own inventions; and how to com-mercialize their innovations. This plan starts with apatent search to establish rights over the technolo-gies that are being used. Although most biotech-nologies are not protected in developing countries,this situation is changing rapidly for large coun-tries such as China, India, and Brazil. NARIs willrequire the capacity to develop intellectual prop-erty plans and the negotiation skills to gain accessto technologies on favorable terms. This capacitynot only requires access to lawyers, intellectualproperty specialists, negotiators, and marketers,but more importantly calls for an important shift inculture among researchers, who commonly preferto concentrate on their science and not be botheredby “administrative rules.”

Impact on IARCs

Strategies for protecting inventions by the IARCsconcentrate on the technology transfer argumenton the one hand and the original objective to de-velop international public goods on the other.Several IARCs are developing agribusiness parksor other mechanisms to link directly with the pri-vate sector and provide additional pathways fortechnology transfer. Another challenge for IARCsis to get access to protected technologies withoutincriminating their primary aim of poverty allevia-tion. A less debated challenge for IARCs is the


Lessons 53

impact of the commercialization of some NARIs(owing to the introduction of IPRs) on IARCs’ abil-ities to reach the resource-poor. Early experience inusing IPRs as a bargaining chip to get access tocommercial intellectual property held abroadshows that this argument for patenting inventionsis weak.

CHALLENGES FOR FARMERS ANDTHEIR ASSOCIATIONSFarmers’ organizations and NGOs that representfarmers’ interests need to be prepared to partici-pate in debates about appropriate IPRs. The imme-diate link between IPRs and investment in plantbreeding may not always be strong, but farmershave an interest in creating incentives for the de-velopment of better planting materials, even if theymay have to pay a bit more for seed. Exceptionssuch as the farmer’s privilege may create a usefulbalance between the rights of breeders and those offarmers. In developing countries, a major difficultyfor farmers’ organizations in adopting an appro-priate position on IPRs in plant breeding is thatdifferent farmers have different interests. The in-terests of commercial farmers quite closely resem-ble those of farmers in industrialized countries, andstrong protection for flower varieties, for example,may be very conducive for the export horticulturesector. The interests of smallholders may be quitedifferent, and a strict IPR regime may reduce theiraccess to potentially good varieties.

The concept of Farmers’ Rights is often linked tothe IPR discussion, but even though the IT PGRFAspecified this concept, there is little agreement as towhether Farmers’ Rights should include the rightto save and use seed on-farm or to exchange or sellfarm-saved seed in all circumstances (given theaddition of the words “as appropriate and subjectto national law”).

In some countries, the right of farmers to protecttheir own local varieties is included in national IPRlegislation. This right is not in conflict with con-ventional IPR systems, but several points deserveattention. If this right is to be implemented byrelaxing the standards for application (especiallyuniformity standards for a variety), then there is arisk that relaxed standards can be misused to pro-tect broader genepools rather than individual vari-eties. Others argue that IPR on varieties conflictswith the moral values of farming communities,which have always relied on free exchange of

materials, and that such protection should not bepromoted for farmers’ varieties. Finally, protectionitself serves a purpose only when the variety iscommercialized on a sufficiently large scale tocover at least the cost of protection. At the veryleast, an IPR system should avoid granting protec-tion for farmers’ varieties without the consent ofthe community that developed them.

Farmers’ associations and NGOs that representfarmers need to be involved in the national debateon agricultural IPRs. Organizations that representfarmers need to develop consultation mechanismswith their members on this issue and to develop awell-informed capacity to involve them in deci-sion-making processes. At the same time, nationalpolitical systems need to ensure adequate opportu-nities for open debate about IPR legislation.

The yes-or-no discussion on IPRs that can be ob-served in many countries today is not very pro-ductive. Instead efforts should concentrate onbalancing the different interests. The five-countrystudy concluded that there is no reason for devel-oping countries to adopt overly restrictive PVP sys-tems: the adoption of such systems to acquire tradebenefits reduces the options for broader support torural development objectives.

It is possible to serve the interests of differentgroups of farmers by providing different levels ofprotection within one legal framework. This objec-tive can be achieved either by providing a minimumlevel of protection and adding additional rules forspecific crops or farmers (for example, export cropscan be protected according to the UPOV 1991 modeland subsistence crops by a less restrictive system) orby designing a stronger IPR system but carefullydelimiting exceptions. For instance, smallholderfarmers should be free to save their own seed ofprotected varieties, whereas commercial farmersshould not (as is the case in the EU both for seed pro-tected by plant breeder’s rights and patents). Incases where the rights are weaker, it is important torecognize that private sector incentives for invest-ment will be correspondingly lower and that publicsector plant breeding will need to be well financedto provide the necessary support.

POTENTIAL ROLE FOR THEWORLD BANKThe World Bank can assist developing countries byproviding immediate support to national efforts atdeveloping and implementing PVP legislation as

well instituting longer-term strategies that fosterthe development of seed sector institutions.

Immediate support for appropriateIPR legislation

Discussion forums. The framing of PVP legislationmust be an open process that considers the inter-ests of all stakeholders. Even in countries wherelegislation is already established, usually many as-pects of implementation and interpretation de-serve careful review. The Bank can supportopportunities for national (or, where relevant, re-gional) forums that promote debate and discus-sion about the shape of PVP legislation and itsimplementation. Although the Bank cannot offerspecific blueprints, it can encourage stakeholdersto take into account both poverty reduction strate-gies and the trade dimension of IPRs. Stakeholdersshould recognize (1) the possibility of providingdifferent levels of protection for different types ofcrops, (2) the necessity of structuring IPR regimesto evolve in concert with national seed systems,and (3) the importance of key parameters in PVPlegislation (table 7.1). The Bank can also sponsormeetings and other activities that explore possibil-ities for regional collaboration in the administra-tion and management of PVP, as well as encouragestronger regional mechanisms for patent applica-tions, including those in biotechnology.

Research. Because there is so little experiencewith PVP in developing countries, further analysisis needed to offer more precise advice to policymakers. In a few years, it would be useful to con-duct a follow-up study, similar to the present one,to monitor progress and synthesize what willsurely be a considerable amount of new experienceas many more countries institute PVP systems andbegin to gain experience with patents in biotech-nology. Analysis as part of sector strategies canallow the Bank to help countries identify situationsin which inappropriate or ineffective IPRs mayrestrain the development of specific crop sectors ormarket segments. Furthermore, there are specificinstances of research that might be undertaken,such as an examination of how to structure fee ratesfor PVP, how IPRs and Farmers’ Rights may effec-tively be combined, and how to support modalitiessuch as patent pools and clearinghouses to ensurethat excessive restrictions imposed by biotechnol-ogy patents do not limit the development of a com-petitive seed industry.

Bilateral trade negotiations. Although the TRIPSrequirements for the protection of plant varietiesallow countries considerable flexibility, bilateraltrade negotiations with industrialized countriesmay include proposals to adopt more restrictiveIPRs, such as plant variety patents. Wherever theBank can use its influence, it should encourage bothpartners in such negotiations to carefully considerpossible impacts on equitable agricultural devel-opment and to recall that IPRs can be differentiatedby crop and allowed to evolve.

Additional opportunities for strengtheningseed sector institutions

This report argues that the potential contribution ofIPRs to strengthening national seed sectors de-pends on a range of other factors, including thebusiness environment, the nature of the agricul-tural economy, and public agricultural research ca-pacities. Contributions from a donor like the WorldBank to relevant institution building in a particularcountry should be based on a long-term strategy.IPR regimes in plant breeding will make a strongercontribution to seed system development throughcomplementary attention by the World Bank to in-stitution building. Examples include IPR institu-tions themselves, seed regulation, the commercialseed industry and agribusiness, and public agri-cultural research and extension.

IPR institutions. Many countries will require as-sistance in the design and development of the IPRinstitutions (for both PVP and patents) needed tosupport agricultural innovation and development.This assistance may include support to ensure thatIPR systems are transparent and efficient, encour-agement for exploring regional and internationalharmonization, and opportunities for supportinghuman resource development. Capacity buildingmay also be supported for breeders, seed produc-ers, traders, and farmers to understand the objec-tives of the system in order to support compliancewith the rights and obligations associated with it.The development of a PVP system should thusinclude an extensive information campaigninvolving all stakeholders. Support could also in-clude the following:

• In some countries, the PVP system may nothave access to adequate technical capacity inconducting or interpreting DUS tests, andshort-term training courses would be useful.


Lessons 55

• As more PVP systems are put into practice, of-ficials and technicians from PVP officeswould profit from occasional opportunities tomeet with their counterparts, exchange expe-riences and learn about new developments;the Bank could provide a suitably neutralaegis for such workshops.

• Examiners from national patent offices couldprofit from short-term training related to theprotection of biotechnology innovations, andthey could learn from the experience of theEuropean Patent Office (EPO) or USPTO.

• The judicial systems of developing countrieswill need to gain experience in PVP andpatents in plant science, and suitable trainingactivities would be very useful.

• Countries may require assistance in provid-ing information to stakeholders in the seedsystem regarding the rights and obligationsassociated with national IPR regimes for plantvarieties and biotechnology.

Seed regulation. As responsibilities for seed produc-tion in developing countries shift from the public tothe private sector, the management and responsi-bilities of national seed regulatory agencies must bereconsidered. Various donors (including the WorldBank) have encouraged the rationalization and har-monization of seed regulations (for example, inSub-Saharan Africa). Because competent seed reg-ulation is needed to support an IPR regime forplant varieties, further attention to seed regulatoryreform, at both the national and regional levels,would have high payoffs. Areas that might be con-sidered for donor attention include:

• Training and advice that allows seed regula-tory agencies to tailor regulatory proceduresand requirements to their financial resources.

• Further support to regional collaboration andharmonization.

• Building competence in seed companies sothat the private sector can assume greater reg-ulatory responsibilities.

• Shifting some public regulatory investmenttowards consumer (farmer) education andconsumer protection.

The seed industry and agribusiness. The World Bankcan also support the growth of the private sector,including the commercial seed industry andagribusiness development. An appropriate PVPsystem should encourage the growth of the do-mestic private seed sector. The Bank may find op-portunities to stimulate the sector through, forinstance, support for seed industry associations.Agribusiness projects also have relevance to PVP,especially if they require the use of high-qualityseed or planting material. Bank assistance to suchprojects should include a thorough review of theIPR implications:

• Are IPRs relevant for the success of the pro-posed project (how, what type)?

• Do stakeholders participating in the projecthave access to sufficient intellectual propertyprotection?

• Are complementary or supporting actions re-quired to ensure that intellectual propertyprotection is not a constraint to project suc-cess?

• Is it clear that the relatively strict types of IPRsrequired for agribusiness do not interferewith the provision of seed for subsistenceagriculture?

Public agricultural research and extension. Because theestablishment of IPR regimes for plant varietiesmay have a significant impact on NARI strategies,the Bank should consider how to include thistheme in its support for agricultural research, bothat the national and international level. One priorityis to assist NARIs in developing their IPR strategiesand policies to take advantage of national IPRregimes. In many cases NARIs also need advice onusing the private seed sector to promote public va-rieties. This includes advice on developing skills incontracting with seed companies, ensuring that asource seed production system is in place, andbuilding competencies in promoting new varietiesand monitoring their uptake. In addition, NARIsmay need assistance in developing the capacity toassess their freedom to operate with protected tech-nology. NARIs need assistance to formulate intel-lectual property policies and strengthen their legaland negotiation capacities.

57

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Traynor, P.L., and J. Komen. 2002. Regulating genetically-mod-ified seeds in emerging economies. In N.P. Louwaars (ed.),Seed Policy, Legislation, and Law: Widening a Narrow Focus.Binghamton: Food Products Press (The Haworth Press Inc.).


References 59

Tripp, R. (ed.). 1997. New Seed and Old Laws: Regulatory Reformand the Diversification of National Seed Systems. London:Intermediate Technology Publications.

van Wijk, A.J.P., N.P. Louwaars, and D.J.F. Eaton. 2004.Framework for the Introduction of Plant Variety Protection in

Developing Countries. Wageningen: Centre for GeneticResources, The Netherlands.

Wallø Tvet, M.W. 2005. How will a Substantive Patent Law Treatyaffect the public domain for genetic resources and biologicalmaterial? Journal of World Intellectual Property 8(3): 311-344.

61

GENES AND DNA SEQUENCESTransgenic crops are distinguished by the pres-ence of several types of “foreign” genetic material.These include functional genes (that is, genes thatcode for insect resistance, herbicide tolerance, orother desired characteristics); selectable markergenes (which have characteristics easily identifi-able in the laboratory and, when linked to a func-tional gene, facilitate the detection of transformedcells); promoters (which regulate the timing andlocation of the expression of functional or markergenes); and end sequences (portions of DNA thatterminate transcription). These different types ofgenes and sequences (and their combination in a“construct”) are all candidates for patenting, andmost industrialized countries allow patents ongenes and sequences.

The situation in developing countries is morecomplex. Some countries specifically prohibit genepatents (for example, the Andean Pact countries);others, such as China, allow gene patents; and mosthave yet to formulate a clear policy. In general,claims on plants are not allowed in developingcountries. On the one hand, this policy providesfreedom to operate for research; on the other, it ham-pers investment in biotechnology for agriculture.

It is important to recognize that patents on plantgenes affect more than just the production of trans-genic varieties. It is possible to identify and protectgenes that are used in more conventional breedingprocedures. For instance, several herbicide-tolerantcrop varieties commercially available in NorthAmerica incorporate patented genes that have beenidentified through techniques such as mutagenesisor whole cell selection and then incorporated innew crop varieties through conventional breeding.Another example is IR maize, which is being testedin Kenya. The key to patent protection in thesecases is the definition of novelty—that is, somecountries prohibit patent protection on substances

found in nature, which are considered to be dis-coveries rather than innovations. In most cases, adiscovery must be further developed in order to beconsidered an innovation and eventually gain apatent that may effectively include the discovery.Genes discovered and developed in the course ofconventional breeding can be patented in severalcountries, however. A good example is the resis-tance to aphid (Nasonovia ribisnigri) in lettuce,patented by Rijk Zwaan (a breeding company inthe Netherlands) in the USA and Europe. TheEuropean patent is, however, under appeal fromvarious sides, including some important vegetableseed companies.

Although the possibility of patenting genes iscontroversial, the concept itself seems straightfor-ward. Even so, several issues contribute to makingthis area a particularly complex one for patent law.One problem is related to broad patent claims,which may cut a swath as wide as “all geneticallyengineered cotton plants.” Although such compre-hensive claims may be more difficult to make nowthan in the early years of biotechnology, the issue ofbroad patents remains a concern for many areas ofresearch, including the plant breeding industry(Barton 2000). Another issue that affects gene patent-ing is the degree to which claims are allowed forgenetic material whose functions are incompletelyunderstood. For instance, the Human GenomeProject witnessed a rush towards patents for a widerange of DNA sequences without any correspond-ing characterization, and although such practices aremore prevalent in the pharmaceutical industry thanin plant breeding, they illustrate that there is not yeta widely accepted definition of how genetic mater-ial qualifies for a patent. This issue is related to athird issue, which concerns the type of genes orDNA sequences that might be patented. Claimshave been made for protecting DNA that doesnot constitute a complete gene, including promot-ers, nucleic acid probes (used to identify DNA

Appendix A. Patents on Biotechnologies

sequences), and polymorphisms. On the other hand,patents have been sought for collections of genes,from bacterial cloning vectors to entire genomes.Both EPO and USPTO now have stronger guidelinesconcerning claims on genes: there must be a goodknowledge and description of the gene’s function.

A fourth issue that complicates the granting anddefense of gene patents is the variable nature of thegenes themselves. A good example of the difficul-ties in identifying what precisely is eligible for pro-tection is provided by the Bt genes that are used forinsect resistance in cotton, maize, and other crops.The Bt bacterium produces certain insecticidal pro-teins and has been used as a source of “natural”insecticide for many years. The techniques of bio-technology have allowed the identification andtransfer of the genes that code for these crystalline(“Cry”) proteins; the nomenclature describes aseries of different cry genes (found in differentstrains of the bacterium), each coding for a distinctCry protein that is effective against specific insects.(Thus the cry 1Ac gene codes for the Cry 1Ac pro-tein that is effective against the cotton bollwormand is the basis of most versions of Bt cotton.) Notonly are there various claims on genes that code forspecific Cry proteins; the cry genes that are used intransgenic plants are synthetic and significantlydifferent from the original “wild” genes found inthe bacterium. In most cases, the Bt genes are“codon modified” because part of the code thatfunctions in a bacterium must be changed to bemore effective in a plant. So although the insectici-dal protein that is produced by the transgenic plantmay be essentially identical to that produced by thebacterium, the governing gene may look somewhatdifferent, and patent claims can be made on themodified gene and the techniques used for its mod-ification. A cry gene may be further altered by elim-inating certain portions to produce a truncatedform of the gene (which may prove more effective),and research has also created “fusion” genes thatcode for novel proteins combining parts of two dif-ferent Cry proteins. The various types of cry genesmust be linked with specific promoters as well. Thepotential patent claims on various aspects of theprocess and disputes over definitions of noveltyexplain why Bt technology causes considerableuncertainty among scientists in developing coun-tries and is the subject of continuing legal disputesamong the major biotechnology MNCs. One of themain cases was recently won by Dow after almosttwo decades of dispute. Although the Bt example is

particularly complex, it illustrates that geneticmodification is rarely a case of simply identifyingand moving a gene from one organism to anotherand demonstrates how patent claims on genes maycover a range of issues.

TRANSFORMATION METHODSThe possession of appropriate genes and sequencesis obviously not sufficient to produce a transgenicplant variety. There are two major techniques forintroducing foreign genetic material into an organ-ism. One is based on Agrobacterium tumefaciens, abacterium that is able to insert its own or othergenes into a plant genome. This transformation isaccomplished through a plasmid (an autonomouspiece of DNA) from the bacterium. The plasmid isused as the basis to construct a vector that incorpo-rates the genes that are to be transferred to theplant. Tissue of the target plant is incubated in aculture of Agrobacterium that includes the transfor-mation vector, and the modified plant cells are thenregenerated to develop viable transformed plants.The second type of transformation technique isbased on the direct, physical transfer of foreigngenes into target plant cells. The most commonexample is particle bombardment (biolistics), inwhich metal particles are used as carriers of plas-mids containing transgenes and are introducedinto target plant tissue at high velocity. The plantcells are tested for successful transformation andthen regenerated. Both Agrobacterium and biolistictransformation techniques are complex procedurescharacterized by a wide range of modifications andimprovements. For instance, the Agrobacteriummethodology was initially unsuccessful at trans-forming monocotyledons (such as cereals), butseveral recent advances have overcome this limita-tion. Similarly, the success of biolistics depends ona number of engineering considerations governingparticle delivery. Hence both technologies are sub-ject to a large number of broad and specific patentclaims that make their utilization (and any claimson the resulting varieties) far from straightforward.The particle gun technique was developed byCornell University and licensed exclusively toDupont, thus providing an exclusive right touse and sublicense the technique. A developmentthat may address restricted access to transforma-tion methodology is the recent announcement byCAMBIA of the discovery of transformation meth-ods based on several genera of bacteria other than


Appendix A. Patents on Biotechnologies 63

Agrobacterium and the establishment of an “opensource” licensing facility for these techniques(Broothaerts et al. 2005). Whether this methodologyproves as efficient as the older methods remains tobe seen.

REGENERATION METHODSThe transformed plant cells (the products ofAgrobacterium or biolistic methods) must be regen-erated to produce whole (genetically modified)plants. Various techniques, part of the science oftissue culture, are used to accomplish this goal, andeach regeneration protocol is appropriate to partic-ular species or even varieties. The majority of thesetransformation methods are described in the pub-lished literature and hence are available to allresearchers, but modifications that provide higherefficiency or that are appropriate to specific speciesmay be kept secret by individual laboratories,because it is impossible to detect their utilization inthe final product.

DIAGNOSTIC TECHNIQUESThe other major area of biotechnology relevant tothe plant breeding industry is diagnostic tech-niques that allow the identification of genes or se-quences associated with particular functions orcharacteristics. Many of these methods are knownas marker systems, and their application in breed-ing is referred to as “marker assisted selection”(MAS). The application of these methods can en-hance the efficiency of plant breeding by accelerat-ing the identification of desired plant types, but theend result of the process is usually a conventional(nontransgenic) variety. Although private firmsrarely discuss their breeding techniques, MAS tech-niques have already contributed to a certain pro-portion of the varieties that are commerciallyavailable. Many public breeding programs indeveloping countries also use MAS, and a fewproducts are beginning to appear (such as a downymildew-resistant variety of pearl millet releasedrecently in India). The potential applications for

MAS continue to grow, but because the costs ofthese breeding techniques are usually higher, care-ful decisions must be made regarding when to in-vest in these techniques (Dreher et al. 2002).

The different MAS techniques are all based onthe ability to detect differences in DNA sequencesbetween selected plants. In some cases, the DNA isdigested with restriction enzymes that cut it intosegments of different lengths; the patterns of DNAfragments are compared, and the pattern associ-ated with the desired genotype is identified. Anearly example of this method is restriction frag-ment length polymorphism (RFLP). In other cases,specific short nucleotide sequences in DNA areidentified and multiplied (“amplified”) throughthe polymerase chain reaction (PCR); differences inthe resulting patterns are correlated with differentplant functions or characteristics. The most impor-tant techniques include random amplified poly-morphic DNA (RAPD), amplified fragment lengthpolymorphisms (AFLPs), and microsatellites. Byidentifying a close linkage between the marker anda preferred gene (allele), MAS provides an effectivemethod to screen large numbers of plants to deter-mine if the gene is present. The elements of theseMAS techniques are subject to varying degrees ofprotection. They rely on DNA sequences andprobes, some of which may be available publiclywhereas others are covered by patents. The AFLPtechnology is recognized as being particularlypowerful. It is available in commercial kit form, butits components are subject to a number of patents.

Although MAS techniques are used in conven-tional plant breeding and no foreign DNA se-quences become part of any resulting variety, theuse of patented diagnostic technology may haveimplications for a plant breeder’s ability to claimownership of the final product. The exact situationwill depend on the conditions under which thetechnology was acquired and the wording of anycontract with the supplier. So-called “reachthrough claims” have not seemed to play a signifi-cant role in this area to date. Patent offices have alsobecome aware of the negative effect of these claimsand are very critical in granting wide claims.

65

PUBLIC SECTOR RESEARCH INCASE STUDY COUNTRIESChina

China’s public agricultural research system in-cludes more than 1,600 research institutes. Approx-imately 10 percent of the research is carried out atthe national level, while 90 percent takes place inprovincial and prefectural institutes. The totalbudget for agricultural research was US$ 1,025 mil-lion in 2002. About 73 percent is for crop-basedresearch, of which 40 percent is devoted to cropbreeding. China has invested heavily in agricul-tural biotechnology research—an estimatedUS$ 112 million in 1999 and a staff of more than2,000 (Huang and Hu 2000).

Agricultural research at the national level is theresponsibility of the Chinese Academy of Agri-cultural Sciences (CAAS), which comprises numer-ous institutes concentrating on specific crops, suchas the CRI and IVF, as well as the BRI, with its focuson biotechnology. The BRI undertakes a widerange of agricultural biotechnology research andhas developed its own Bt gene. This general insti-tutional structure is replicated at the provinciallevel. Thus in Hunan, a major rice-producingprovince, the Hunan Academy of AgriculturalSciences has a Hunan Hybrid Rice Research Centeras well as a Hunan Rice Research Institute.

The public agricultural research system inChina has undergone a number of changes(Huang et al. 2003), including a shift from corefunding to a competitive grant basis and assigningresponsibility to research institutes for raisingtheir own funds. Increased commercialization ofthe public agricultural research system is leadingto overlapping roles and a shifting away fromgoals of food security, poverty reduction, andenvironmental sustainability. Thus despite thesystem’s impressive achievements, it faces many

challenges, particularly given the projectedgrowth in China’s population, income, and asso-ciated food needs.

Colombia

Public agricultural research in Colombia was for-merly in the hands of ICA, but the governmentintroduced an initiative to privatize research in theearly 1990s with the creation of an independentresearch corporation, CORPOICA. ICA remained asa regulatory entity while all research functions weretransferred to CORPOICA. In theory CORPOICA issupposed to be supported by contract research fromproducer organizations and private industry, but infact the Ministry of Agriculture and RuralDevelopment still provides most of CORPOICA’sbudget by “outsourcing” research tasks. CORPOICAis responsible for research on most of the agricul-tural crops in Colombia, but research for importantcash crops is in the hands of a number of semipublicinstitutes supported in part by grower associations(for coffee, sugarcane, and palm oil, for example).CORPOICA’s budget for 2004 was US$ 13.8 millionand it employed about 300 researchers (compared toabout 500 employed 10 years ago). CORPOICA hasa biotechnology department, although it has notdone any transformations.

India

Responsibilities for public agricultural research inIndia are divided between the ICAR institutes andthe state agricultural university system. ICARcoordinates 89 research institutes, most of themspecializing in particular commodities or disci-plines. ICAR employs about 4,100 scientists. Muchof the responsibility for agriculture in India is leftto individual states, and 34 state agricultural uni-versities (and 120 affiliated zonal research stations)

Appendix B. The Breeding and Seed

Sectors in the CaseStudy Countries

carry out research and outreach (with partial sup-port from ICAR). The total research expenditure in2000 was estimated to be US$ 625 million, equiva-lent to 0.42 percent of agricultural GDP (Pal andByerlee 2003), with about 55 percent contributed bythe central government and 45 percent by thestates. It is estimated that approximately US$ 25million is spent on biotechnology research.

Kenya

The major responsibility for agricultural research iswith KARI, although some public agriculturalresearch is also conducted by Kenyan universities.KARI is one of the stronger NARIs in Sub-SaharanAfrica, but even so its operations are severely lim-ited by its budget. The KARI budget for 2004/05was nearly US$ 40 million, a sharp increase from theprevious year (US$ 25.5 million), mostly owing to asignificant expansion of donor funding, which

covers slightly more than half the total budget.KARI has long experience in plant breeding and hasbeen particularly successful in producing maize hy-brids for the highland regions that constitute themajor maize growing area. KARI has invested inbiotechnology and has inaugurated a biotechnologyfacility that will support work on transgenic insect-resistant maize and other projects.

Uganda

Uganda’s public agricultural research is managed byNARO, which is also responsible for livestock, fish-eries, and forestry research. Its budget for 2004/05was US$ 11.1 million, 70 percent of which is providedby donors. NARO is currently reorganizing toaccommodate the Plan for the Modernization ofAgriculture (PMA). NARO is expected to contributeto the PMA by conducting research that is demanddriven and market responsive. Future funding for


Table B.1 Variety Release in the Case Study Countries

Country Rice Maize Beans Cotton

Chinaa 1996-1999: 237 publicand 3 private

2000-2002: 189 publicand 28 private (54% ofreleases hybrid)

1996-1999: 170 publicand 4 private

2000-2002: 105 publicand 34 private (allreleases hybrid)

1996-1999: 107 publicand 10 private

2000-2002: 85 public and15 private (8% of releaseshybrid)

Colombia 1992-2003: 25 varieties(5 public)

1990-2003: 80 varieties(11 public)

1950-1989: 33 varieties

1990-2003: 20 varieties(all public)

1990-2003: 29 varieties(6 public)

India 1995: 142000: 332001: 202002: 22(all public)

1960-1999: 120 publichybrids and OPVs, plusan approximately equalnumber of unnotifiedprivate hybrids

1995: 52000: 62001: 72002: 9(mostly public) plus manyunnotified private hybrids

Kenya 1960-1999: 17 hybridsand 5 OPVs (all public)

2000-2003: 43 privatehybrids and 4 privateOPVs; 8 public hybrids

1982-2003: 15 varieties

(7 since 1999) (all public)

Uganda 2000-2003: 12 varieties(all public)

1995-2003: 12 varieties(all public)

Source: Louwaars et al. (2004).a. In China, a “private variety” is one marketed by, but not necessarily bred by, a private firm.


research will come not only from central govern-ment and donor contributions but also from privatecontracts and local governments. It is thus expectedthat NARO will generate a significant amount of itsown funding, although the Research Act leavesopen the question of NARO’s control over any fundsit generates. The new policy envisions researchfunding rising from its current 0.6 percent of agri-cultural GDP to 2 percent.

Variety Release

Trends in the release of varieties developed by thepublic and private sector in the case study coun-tries are summarized in table B.1.

THE SEED SECTOR IN THE CASESTUDY COUNTRIESChina

Until recently, seed in China was supplied primar-ily by public seed production organizations. Theirmonopoly on sales was removed with a new seedlaw in 2000. This law permits private companies,research institutes, or individuals to produce andmarket seed provided they obtain the necessarycertification from the provincial agricultural ad-ministrative department. In addition, public seedcompanies and research institutes are allowed toretain some of the profits from seed sales. The newlaw strengthened a number of trends already visi-ble in the seed sector in the 1990s. While public in-stitutes could already license their varieties andsome private seed companies had appeared, localmarkets were still in the hands of the public seedcompanies operating at the county level. This hasnow changed. Many of the public seed companiesat both the county and prefectural levels have gonebankrupt or have become cooperative companies,selling primarily nonhybrid or unprotected hybridseed. In 2002, there may have been as many as20,000 seed companies in China, including individ-uals selling only small amounts at the local level.A certain amount of consolidation has been takingplace since then, underlining the current unsettledclimate for the sector.

Many research institutes are extending their tra-ditional breeding activities to include productionand marketing. Some private seed companieshave also begun investing in breeding activities.Although foreign companies began marketing

wheat and maize seed in the 1990s through Chinesepartners, direct foreign investments in joint ven-tures (as minority shareholders) in seed productionand marketing have been permitted since 2002only. The most notable example is a joint venturefor production and marketing of Bt cotton betweenMonsanto/DPL and two provincial seed compa-nies. The government’s role has been less pro-nounced in regulating the vegetable seed sector,and private companies, including joint ventureswith foreign companies, have been selling veg-etable seed in China since at least the early 1990s.

Colombia

In the 1970s and 1980s, the Colombian governmentwas involved heavily in the seed sector, operatinga state seed company and offering subsidizedcredit to support the use of certified seed. The statecompany marketed mostly ICA varieties and a fewimported commercial hybrids of maize andsorghum. Government policy encouraged privatefirms to replace the state seed company, and thesefirms thrived under a regime of support prices andgovernment grain purchasing until 1990, whengovernment policy changed. At one point therewere 25 domestic seed companies, but the currentnumber is less than half that; these are comple-mented by several MNCs. The domestic seed com-panies do most of their business in rice seed(6 companies have their own rice breeding capac-ity). The largest player in the market is FEDEAR-ROZ, the national rice growers’ association, whichhas moved from simply marketing inputs to breed-ing rice varieties and selling its own seed. Severalsmall local companies breed and sell their ownmaize hybrids, but the market is dominated by hy-brids from the MNCs. The MNCs have the major-ity of the cotton seed market as well. A range ofpublic programs and producer organizations is re-sponsible for seed production of many other crops,including wheat, barley, beans, and potatoes.

India

One of the contributors to India’s Green Revolutionwas the development of state and national seedcorporations, which provided seed of the new riceand wheat varieties as well as other public cropvarieties. With the exception of some vegetableseed production and imports, the private seed sec-tor did not have a significant presence in India until

the mid-1980s. Policy changes in the 1980s openedthe doors to domestic private plant breeding andseed production and also allowed the participationof foreign seed companies. The economy-widereforms of 1991 further liberalized the seed sector,particularly for the participation of MNCs. The ini-tial expansion was based on hybrid seed, beginningwith hybrid sorghum, pearl millet, and maize.Public research had developed cotton hybrids bythe early 1980s, and private companies quicklyadopted the technology, making India the world’sleading producer of hybrid cotton seed. Theprospect of hybrid rice drew a number of privatecompanies into this area, although hybrids stillaccount for a tiny fraction of India’s rice seed mar-ket. Vegetable seed production is also mostly in thehands of the private sector, which largely producesproprietary hybrids (including some importedseed) but also some public hybrids and OPVs. Mostof the public seed corporations survive, althoughtheir performance and financial stability varywidely between states. The public corporations arerelied upon mostly for producing nonhybrid seedof major crops such as wheat, rice, and pulses. Theparticipants in the private seed sector range in sizefrom large, diversified national firms (some withMNC participation) to tiny local operations thatmay specialize in the multiplication and distribu-tion of seed of a single crop.

Kenya

Until recently, all seed production in Kenya was theresponsibility of the parastatal KSC, and no othercommercial seed operations were allowed. The KSChad exclusive rights to all KARI varieties and alsoestablished its own breeding program, principallyfor maize (although work was also done on wheat,pasture grasses, and sorghum). A policy shift in theearly 1990s allowed MNCs (including some fromSouth Africa and Zimbabwe) to sell hybrid maize(and to a lesser extent sorghum and sunflower)seed. The policy change also encouraged a domes-tic seed industry to develop. There are currentlythree seed companies (besides KSC) with their ownbreeding programs, and several other small compa-nies produce and market seed of public varieties.KARI and KSC signed an agreement awarding roy-alties to KARI for the use of varieties currentlyunder KSC production, although some details ofthat agreement are still in doubt, including the de-gree to which KSC has exclusive access.

Uganda

Uganda has never had a very strong seed sector, butits new policies for agriculture have encouraged anexpansion of activity. Earlier, virtually all seed (ofpublic varieties) was produced and marketed by theparastatal Uganda Seed Project, which had severalproduction facilities. This operation was recentlyconverted to Uganda Seed Ltd., which has been acandidate for divestiture since 1998. Uganda SeedLtd. continues to produce a small amount of seed,but it is now challenged by five local companies thathave emerged in the past few years, mostly based onexperience in grain trading and participation in seedacquisition for regional emergency seed operations.Only one of these companies has its own plantbreeding capacity (it relies on IARC germplasm);most companies multiply and sell NARO varieties.Several multinational and regional companies pro-duce seed in Uganda for export and some also mar-ket seed in Uganda (mostly hybrid maize seed).

SEED REGULATION IN THE CASESTUDY COUNTRIESChina

China’s first seed law was decreed in 1989, followedin 2000 by the “Seed Law of the People’s Republicof China.” Previous regulations required that newvarieties of the major crops must pass two to threeyears of trials and be approved at the state or theprovincial level before being extended and used.Currently this requirement applies to rice, wheat,maize, cotton, soybean, and one or two other cropsdetermined by the agricultural administration de-partment at the state council and the people’s gov-ernment of the provinces, autonomous regions, andmunicipalities. The criteria for new varieties are es-tablished by the MoA or at the provincial level. Thenew seed law has not stipulated any approvalmechanisms for less important crops.

There are rules for seed production and man-agement, including a licensing system for seedproducers and traders. Based on “The Regulationof Crops Seed Production and Operation LicensesApproval,” decreed by the MoA, there are fourtypes of licensed seed companies. The first typeis permitted to produce and market seed ofconventional crops. The second can also deal withhybrids. The third type of seed company can beinvolved in foreign seed trade in addition to



producing and marketing any kind of seed locally.The fourth type of seed company can have its ownbreeding program. All seed companies have theright to carry their own trademarks and have theirown seed packages according to their respectivelicenses. Although Chinese seed regulation isrelatively comprehensive, resources dedicated toenforcement are far from adequate.

Colombia

All crop varieties offered for sale in Colombia mustbe tested for agronomic performance and officiallyreleased. The testing process involves trials in oneor more of five agroecological zones in the country(varieties are released for specific zones). Until re-cently, these trials were run by ICA, but a new reg-ulation (Resolution 2046, which aimed to adjustColombian seed legislation to “the evolution in thedomestic seed industry and to bring it in line withinternational norms”) allows companies with theirown plant breeding capacity to conduct these testsand submit the results to ICA. All seed of agricul-tural crops sold in Colombia must be certified, andICA is the official certification agency. Some seedcompanies complain that ICA does not have the ca-pacity to fulfill this function efficiently, and there ispressure from the industry for ICA to license com-panies to certify their own seed. ICA is also re-sponsible for monitoring seed sales and detectingviolations of regulations.

India

All public crop varieties must be officially releasedand notified through a process that includes per-formance tests at either the state or national leveland notification by the Central Seed Committee.The national level performance testing is managedthrough the extensive All-India Coordinated CropImprovement Programs (AICCIP). Private vari-eties do not require release or notification in orderto be sold. Private varieties may be entered in theAICCIP trials, although the fees for the privatecompanies are currently quite high. In practice,only a minority of private hybrids are officially no-tified, although companies acknowledge that datafrom the tests is useful and that notification is anaid to promoting a variety in the market. Seed cer-tification is managed by state seed certificationagencies, and only notified varieties may be certi-fied. Certification is not compulsory, even for

notified varieties, although various agriculturalprograms and subsidies require that farmers usecertified seed. Most private seed, and a substantialminority of public sector seed, is sold as “truthfullylabeled,” requiring the name of the variety andminimum germination and purity standards.Officers of the state departments of agriculture areassigned to monitor seed sales and collect samplesof commercial seed to test for conformity with cer-tification tags or truthful labels. The seed regula-tions are being reviewed, partly in light of recentIPR legislation, and a revised Seed Act (which tookeffect in 2005) makes some form of variety testingand registration compulsory and provides for op-tional seed certification, involving possibilities forself-certification by companies.

Kenya

Variety approval and release in Kenya was reorga-nized recently and placed under the auspices ofKEPHIS. All varieties of field crops (public and pri-vate) must be entered in National PerformanceTrials, which are divided into agroecological zones.All varieties must be registered, including DUStesting, and this testing takes two years. Seed ofmost field crops also must be certified. The respon-sibility for seed certification lies with KEPHIS andis managed from several regional stations. There issome pressure from seed companies for possibleaccreditation to certify their own seed, but no ac-tion has been taken. The certification requirementhas been enforced even for small-scale, formal seedproduction (by donor-supported producer groups,for example) for crops such as beans and sorghum.However, KEPHIS has indicated that in the futuresmall-scale seed producers will be able to sell seedfor some crops (but not maize) as “standard seed,”which requires only seed quality testing. Kenya,Tanzania, and Uganda recently concluded a har-monization of seed regulations for Eastern Africa.The new accord includes an agreement that vari-eties released in any one of these countries willhave a “fast track” in variety testing in the others.The accord also adopts common certificationrequirements, including a short list of crops withmandatory certification.

Uganda

Variety release in Uganda still follows the systemestablished for public plant breeding. Candidate

varieties (public or private) must undergo a seriesof field trials that take at least three seasons and in-clude at least seven sites; the trials are managed byNARO. If a variety progresses to the most ad-vanced stage, DUS testing begins, managed by theNational Seed Certification Service (NSCS).Performance and DUS data are presented to a com-mittee that is in charge of official variety release;NSCS maintains a national variety list. Seed ofmajor field crops must be certified by NSCS,although the agency is underfunded and the in-dustry is anxious to see a system in which compa-nies can be accredited for certification. Ugandaparticipated in the recent Eastern African harmo-nization of seed policies and regulations.

PVP legislation in the case study countries

Table B.2 provides details on the coverage, lengthof protection, and other parameters of PVP legisla-tion in the case study countries.

SEED USE IN THE CASESTUDY COUNTRIESChina

In China, farmers’ sources of seed vary by regionand crop. Marketed rice seed is divided roughlyequally between OPVs (214,000 tons in 2002) andhybrid seed (250,000 tons). Over 90 percent of thearea sown to hybrids is sown to seed purchasedeach year, whereas the corresponding area figurefor OPVs is estimated to be 30 percent. Hybrid riceseed has gained considerable market share since1980, despite its higher cost for farmers, and nowaccounts for almost half of the area planted to rice.On the other hand, approximately 35-40 percent ofthe rice area is sown with farm-saved or informallyacquired seed. The cotton seed market is domi-nated more heavily by OPVs: hybrid seed accountsfor only about 15 percent of the estimated annualsale of 78,000 tons. Purchased cotton seed fromformal sources is estimated to account for 35 per-cent of the total seed requirement, highlighting theimportance of saved and exchanged seed. In 2003,approximately 56 percent of the cotton area wasplanted to Bt cotton (James 2003), and sales of Btcotton seed are 58 percent of total sales. Since itsrelease, Bt cotton has been absorbed into farmers’seed systems, with a considerable amount of seedsaving and crossing taking place. The situation in

vegetable seed is quite different, given the extent ofdevelopment of hybrid varieties. Replacementrates are estimated to be almost 100 percent formost major vegetable crops, such as Chinese cab-bage, tomato, chili, and cucumber (Hu 1998; Kooet al. 2003).

Colombia

Colombia’s dualistic agriculture is reflected in pat-terns of seed use. For rice, approximately half of thearea is sown with purchased seed each year. Seedpurchase is quite high in this largely commercial en-terprise, although the industry is concerned aboutthe amount of unauthorized seed sales by farmers.Maize is much more of a small-farm crop, and theproportion of purchased seed is much lower thanfor rice. However, the commercial maize sector,which grows maize mostly for feed, depends heav-ily on purchased hybrid seed. Currently threeMNCs account for about 80 percent of the hybridmaize seed market. Cotton is also dominated byMNCs, but official statistics indicate that the degreeof seed saving varies widely from year to year.Although beans are an important crop in Colombia,local varieties account for the vast majority of pro-duction, and there is little formal seed sale.

India

Seed use in India also varies by crop and by region.Nearly 90 percent of rice seed is still farm saved orlocally acquired, but important regional differ-ences prevail. Very little commercial seed is sold insome states, whereas in others, such as AndhraPradesh, more than one-quarter of rice farmersbuy commercial seed in a given season. The situa-tion for maize is even more variable, depending inpart on the farming system. In some states, hybridsaccount for less than 10 percent of seed use, whilein others, where maize is more of a cash crop,hybrids account for more than three-quarters ofmaize seed use. Proprietary hybrids constitute thevast majority of maize seed sales, although stateseed corporations and some small companies sellpublic hybrids and OPVs. Most vegetable growerspurchase seed from the private sector. Vegetablehybrids are important for many species; these maybe products of domestic private plant breeding orimported, but some public hybrids and OPVs arealso on the market. For cotton, there are distinct re-gional patterns of seed use. Northern India relies



Table B.2 PVP Legislation in the Case Study Countries

Parameter China Colombia India Kenya Uganda

Legislation Regulations of thePeople’s Republic ofChina on theProtection of NewVarieties of Plants(1999). Member ofUPOV (1978) since2000.

Law 243 of 1995establishes PBR.Resolution 2046(2003) deffines limita-tions on seed saving.Member of UPOV(1978) since 1996.

Protection of PlantVarieties and Farmers’Rights Act (2001)establishes PBR. Indiahas applied to joinUPOV.

Seed and PlantVarieties Act (Cap326) amended in1991 and 1994 to es-tablish PBR. Kenyajoined UPOV (1978)in 1999.

A draft Plant VarietyProtection Act,debated in Parliamentin 2004, deffines PBRas well as farmer andcommunity rights.

Scope ofcoverage

41 crops currently eli-gible. Certifficates is-sued for 15 species todate; cotton not eligi-ble for protection.

All crops eligible. Inpractice certifficates is-sued for 7 agriculturalcrops and 15 horticul-tural crops.

No crops excluded,but exemption for va-rieties whose commer-cial exploitationwould be a danger topublic order, publichealth, and so forth.

No crops excluded; todate applications havebeen accepted for 31agricultural crops and23 horticultural crops.

No crops excluded.

Length ofprotection

20 years for vines,fruits, and ornamen-tals; 15 years for allother crops.

25 years for trees andhorticultural crops; 20years for ffield crops.

18 years for trees andvines; 15 years forother crops.

18 years for trees andvines; 15 years forother crops.

25 years for trees andvines; 20 years forannual crops

Farmer seedsaving andexchange

Seed saving and ex-change are permitted.(Local and informalseed sales are regu-lated by seed law.)

Farmers with morethan 5 ha not allowedto save seed of pro-tected varieties. Nofarmer’s privilege forhorticultural or treecrops or transgenic va-rieties.

Seed saving, ex-change, and sale byfarmers are permitted,but not sale of“branded seed.”

Seed saving currentlypermitted, but movingtowards UPOV 1991.(Local seed sale re-stricted by certifficationrequirements)

Farmers have the rightto use, exchange, andsell farm-saved seedof protected varietiesbut not “on a com-mercial scale.”

Breeder’sexemption

Protected varietiesmay be used forbreeding. (No specialrules for EDVs.)

Protected varietiesmay be used forbreeding.

Protected varietiesmay be used forbreeding. Protectionof EDV depends onrights of originalbreeder.

Protected varietiesmay be used forbreeding, but movingtowards UPOV 1991.

Protected varietiesmay be used forbreeding.

Protection ofextant varieties

Protection offered forvarieties that were inChina up to 4 yearsbefore a species/genus becomes eligi-ble for protection (ap-plication to be madewithin 1 or 2 years,woody and agricul-tural species resp.)

Amnesty for 1 yearwhen PVP was intro-duced for offficiallyreleased varieties.Protection periodbased on remainingperiod, counting fromyear of release.

Varieties already re-leased and notiffiedwill be eligible forprotection (from dateof original notiffica-tion).

Public varieties al-ready released eligiblefor protection (fromdate of ffiling), but de-cision contested.

Extant varieties not eli-gible for protection.

Plant varietypatents

Hybrids can fall underthe scope of a patentfor a “breedingmethodology.”

Genetically modiffiedorganisms may bepatented because notfound in nature.

No patents of plant va-rieties.

No patents of plant va-rieties.

No patents of plantvarieties.

Source: Louwaars et al. (2004).

to a large extent on OPV cotton (in large part be-cause suitable hybrids have not yet been devel-oped for this region); these are largely publicvarieties, produced by both private and publicseed companies. In central and southern India, incontrast, most of the cotton sown is hybrids(mostly private), produced almost exclusively byprivate firms.

Kenya

The star performer of the Kenyan seed sectorcontinues to be hybrid maize. Kenya was one ofthe first countries in Sub-Saharan Africa to pro-duce hybrid maize, and many farmers have longexperience with relying on hybrid seed. Most ofthese farmers are in the more productive high-lands, the center of commercial maize produc-tion in Kenya. Nationwide, annual purchase ofcommercial maize seed accounts for about 45percent of maize area; the vast majority of this ishybrid seed, with some OPVs (public and pri-vate) being sold in more marginal productionareas. Maize seed sales are still dominated byKSC, which accounts for roughly 90 percent ofthe market; the remainder is divided among six

other companies. Little seed of other crops issold, although a few companies sell a smallamount of seed of KARI bean varieties, and someMNCs market sunflower hybrids. Virtually allvegetable seed is imported. Most seed of cropsfor dryland areas (sorghum, millet, pigeon pea,and so forth) is produced only through specialdonor- or government-supported projects.

Uganda

Although seed production and sales are increasingin Uganda, the majority of the industry’s businessis still through special projects or NGOs rather thanover-the-counter sales. The major product is maizeseed; sales in recent years were under 2,000 tonsbut jumped to nearly 5,000 tons in 2003. Beans arein second place, with roughly 800 tons sold annu-ally. Smaller amounts of seed of sorghum, ground-nuts, and several other food crops are also sold.

Summary data on the use of purchase seed

Table B.3 presents comparative data on the use ofpurchased seed for major field crops in the casestudy countries.


Table B.3 Seed Use for Major Field Crops in the Case Study Countries

Rice Maize Cotton

Area Area sown with Area Area sown with Area Area sown with planted purchased seed planted purchased seed planted purchased seed

Country (000 ha) (%) (000 ha) (%) (000 ha) (%)

China 30,000 30 (OPV)90 (hybrid) 23,000 96 3,200 35

Colombia 470 50-60 550 15 44 35-65

India 45,000 11 6,100 25 8,500 65

Kenya 1,600 45

Uganda 540 20-35 160 -

Source: Louwaars et al. (2004).

73

For historic background and general policy issuesrelated to IPR systems, please refer to chapter 3. Thisappendix provides an analysis of the differences be-tween existing protection systems under the UPOVConventions of 1978 and 1991, and the US utilitypatent system. (Plant patents have not been in-cluded, because they cover a very limited range ofcrops in one country only.) This appendix also pro-vides a brief introduction to Farmers’ Rights and theprotection of biotechnological inventions.

FARMER’S PRIVILEGEThe traditional right of farmers to save seed fromtheir harvests to plant the following season is animportant aspect of sui generis systems and is one ofthe most contentious aspects of IPRs in plant breed-ing. Although this practice is often described as a“farmer’s right,” it is referred to here by the UPOVterm of “farmer’s privilege” to distinguish it fromthe broader concept of “Farmers’ Rights,” dis-cussed below.

The 1978 UPOV Convention assumed thatfarmers were permitted to save and reuse seed ofprotected varieties as part of “private and non-commercial use.” However, article 15(2) of the1991 UPOV Convention rules that on-farm seedsaving is not permitted without the consent of thebreeder, although it allows member states to spec-ify crops for which the use of farm-saved seed ispermitted, “taking into account the legitimate in-terests of the breeder.” In the EU, this provision isinterpreted as the right of smallholder farmers tosave seed for specific crops and the right of thebreeder to collect royalties on farm-saved seedused on larger farms. The 1991 Convention alsoprohibits any transfer of seed of protected varieties(through sale, barter, or gift) between farmers.Utility patents on plant varieties are even morerigid, and a patented variety normally cannot be

saved for subsequent use as seed on the farm ortraded or exchanged with other farmers.

Various interpretations of farmer’s privilegehave favored the adoption of laws based on themore liberal 1978 UPOV Convention in many de-veloping countries. In most cases in these countries,restrictions on saving seed of food crops on the farmare neither administratively feasible nor politicallyacceptable. Making the transfer of seed from farmerto farmer illegal is widely considered incompatiblewith the traditions of small-scale farming.

The issue of seed saving is a good example ofhow IPRs in plant breeding must be tailored to theconditions of national seed systems. Even within asingle country, the requirements and conditions ofdifferent crop production systems are not uniform,and countries could consider legal options thataddress this variability. For instance, earlier seedlaw in the Netherlands included severe restrictionson saving planting materials for ornamental crops,while field crops were regulated on the basis of themore liberal UPOV 1978 Convention. Many vege-tatively propagated commercial flower species canbe multiplied very rapidly by farmers, whichwould considerably reduce revenues for breedersand provide inadequate incentives for innovationin a sector that is very important for Dutch agricul-ture. Thus an amendment to the law made thefarm-level propagation of such species illegal. Thisexample emphasizes that countries need to designappropriate levels of protection for different typesof commodities, in accord with the domestic agri-cultural economy and plant breeding capacities.

BREEDER’S EXEMPTIONThe breeder’s exemption is the right of a breeder touse a protected variety for developing new vari-eties. This exemption stems from the traditionallyunrestricted use of seed by farmers and breeders.

Appendix C. Major Issues in Current IPR

Systems for Plant Varieties

It is seen as a way of promoting the development ofthe best varieties for farmers, limiting the develop-ment of long-term commercial advantages,improving opportunities for smaller breeding com-panies, and thus promoting competition in the sec-tor. Unlike the farmer’s privilege, the breeder’sexemption has not dramatically changed in laterUPOV Conventions, prompting some companiesin the USA to look to the patent system for protect-ing their germplasm (box C.1). The only modifica-tion in the 1991 Convention is the limitation onEDVs, which may fall under the rights of the origi-nal breeder. The EDV provision is meant to limitthe possibility of “cosmetic breeding,” which pro-duces a variety that is only slightly different fromthe original through techniques such as mutationbreeding, repeated backcrossing, or genetic trans-formation (for example, simply inserting a trans-gene in a protected variety). The EDV concept issusceptible to different interpretations, however,and is the subject of an ongoing debate amongbreeders (ISF 2004). An EDV can be protected whenit is DUS and new, but to commercialize the vari-ety, the breeder of the EDV must have the consent

of the person or entity that holds the rights to theoriginal variety. Some larger companies would liketo introduce the concept of “genetic distance” in thedefinition of an EDV, but others fear that this stepcould lead to the monopolization of certain genepools. After much debate, seed company represen-tatives recently agreed upon arbitration rules forEDV disputes (ISF 2005).

OTHER ISSUES RELATED TOPLANT VARIETY PROTECTIONRegardless of whether they want to follow UPOV,countries face several additional important IPR is-sues that require attention. These issues include thechoice of crops eligible for protection, the protec-tion of harvested materials, and the requirementsfor variety registration.

Although it is expected that a country’s IPRregime for plant breeding eventually will providesome type of protection for all cultivated species,both the 1978 and 1991 UPOV Conventions pro-vide guidelines for phasing in this protection.


Box C.1 Breeder’s Exemption and the Patent System.

For seed companies in the USA, one of the attractionsof patents for plant varieties is the absence of abreeder’s exemption: patented varieties cannot beused to develop new varieties without the consent ofthe patent holder. The research exemption availableunder patents in the USA is much narrower than inmany other countries, essentially eliminating the pos-sibility of using a patented variety in a research pro-gram, and some US seed companies would like to seethis as a pathway for eliminating the breeder’s exemp-tion for protected varieties. Although most other coun-tries do not grant patents on plant varieties, there is adanger that biotechnology patents could effectively re-move the breeder’s exemption where, for instance, aPVP-protected variety contains a patented gene.

The EU has attempted to resolve this conflict be-tween patents and PVP by providing a farmer’s privi-lege, where applicable, in the patent system, and theoption of compulsory cross-licensing, in the spirit ofthe breeder’s exemption (EC 1998). But the conditions

for granting such licenses imply a limitation of thebreeder’s exemption, compared to the freedom avail-able under PVP (Eaton and van Tongeren 2006). Theseed industry association, representing majority opin-ion among its members, has stated that it would preferto see an unencumbered breeder’s exemption remain(ISF 2003), without the complications posed by cross-licensing (ESA 2004). The breeder’s exemption on va-rieties that also include patented components iscurrently maintained through a “gentlemen’s agree-ment” among companies, but it is not clear now howlong this situation will last. A workable legal solutionto maintaining the breeder’s exemption while at thesame time respecting patents for plant componentshas yet to be developed. Controversial discussions,however, have started recently in certain sectors of theseed industry to delay access to the breeder’s exemp-tion under the UPOV system. Such an action wouldsignificantly reduce the difference between patentsand PVP.

Source: Authors


The 1991 Convention expects initial coverage of 3genera or species with a phased expansion to 24over an 8-year period. There is debate over whetherthis phased expansion is compliant with the TRIPSAgreement, which specifies that countries have toprovide for the protection of varieties of (any) cropspecies. Countries must also decide how to treat va-rieties that are already in commercial seed produc-tion, the majority of which are likely to be publiclyreleased varieties. Such extant varieties may begiven a full term of protection, be protected for therequisite period beginning from their original re-lease date, or be excluded from protection.

One of the innovations of the 1991 UPOVConvention is the possibility of expanding protec-tion to harvested materials. This regulation allowsthe breeder to protect his or her rights not only inthe seed market but also in the market of the har-vested product, if the breeder has not had the “rea-sonable opportunity to exercise his right” on thepropagating material. The principal application ofthis regulation occurs where access to seed orplanting material cannot be controlled (for exam-ple, in production areas in countries that do nothave an operational PVP system) and the productenters markets where the variety is protected. Thisrule is used particularly in the flower industrywhen flowers are produced in developing coun-tries and shipped to Europe and the USA. Now thatthe most important flower producing countries inthe South are members of UPOV, there is a debatewhether breeders should still claim rights on theharvested products, but shipments from thesecountries have occasionally been seized in the im-porting countries.

The establishment of a PVP system also requiresdecisions regarding the nature of the variety regis-tration process. UPOV provides detailed guide-lines on descriptors for variety registration. Intheory, an application must be compared with allvarieties of common knowledge, but the greatworldwide increase in variety registration is mak-ing it more difficult to assess the uniqueness of avariety. There are calls for greater collaborationamong PVP offices and the establishment of aneffective reference collection, but problems willremain for some time (Le Buanec 2004). The re-sponsibility for data collection must also be deter-mined. In some cases, breeders are responsible forproviding the data required for a DUS application;in other instances, a national PVP office does the ex-amination, or it contracts DUS testing to indepen-

dent research institutions or purchases DUS re-ports from other authorities. Decisions also need tobe made regarding the registration of hybrids(and/or inbreds) and the provision or deposit ofgermplasm, especially in the case of hybrids, whichare often treated as trade secrets.

FARMERS’ RIGHTSAn issue that falls outside of the TRIPS require-ments for IPRs in plant breeding but which elicitsconsiderable debate is the concept of Farmers’Rights, which has several aspects, such as the rightof farmers to save (and use, exchange, and sell)seed derived from their own harvests. The ITPGRFA brought three basic concepts under thescope of Farmers’ Rights: (1) the right of benefitsharing, which gives farmers the right to be com-pensated for their contributions to the develop-ment and maintenance of genetic resources and formaking them available for use in breeding; (2) theright to be involved in the development of nationalpolicies; and (3) rights related to the protection oftraditional knowledge relevant to genetic re-sources. As a corollary, farmers may also claimownership over their local varieties and apply forPVP. There is controversy over whether some ofthese aspects of Farmers’ Rights should be in-cluded in PVP legislation to allow countries to com-ply with TRIPS, CBD, and IT PGRFA through onepiece of legislation. Many national PVP laws makeno mention of these issues, but India recently en-acted “The Protection of Plant Varieties andFarmers’ Rights Act,” and the Organization ofAfrican Unity produced model legislation for “TheProtection of the Rights of Local Communities,Farmers, and Breeders, and for the Regulation ofAccess to Biological Resources.” In a given country,decisions on how to treat Farmers’ Rights will needto be based on an assessment of the major sourcesof innovation in plant breeding in the country, theaspirations of farming communities, and possibili-ties for administering and enforcing the wider as-pects of Farmers’ Rights.

The right of benefit sharing would seem to offerattractive possibilities for ensuring that farmers’ingenuity and experience are fairly rewarded. Asa number of observers have pointed out, however,there is virtually no experience in the actual im-plementation or management of such rights inagricultural crops. The CBD would require a directlink between the benefit sharing and the use of a

particular genetic resource. However, the extent towhich particular local varieties (with identifiable“owners”) may be used in the development of newcrop varieties, and the problems in calculating theexact contribution of such a variety, monitoringseed sales, and collecting the appropriate royalties,make the management of such compensationmechanism hugely problematic (see, for example,Srinivasan 2003). A declaration of source is cur-rently discussed in the framework of the CBD.A multilateral approach to benefit sharing is in-cluded in the IT PGRFA for a number of importantcrops, but the implementation rules have yet to bedesigned. Similarly, the degree to which farmer-bred varieties can be identified, registered, andmarketed has yet to be tested (see, for example,Ramanna and Smale 2004).

PATENTS AND BIOTECHNOLOGYIn the past two decades, the contributions ofbiotechnology have transformed the science ofplant breeding. The most visible (and controver-sial) aspect of plant biotechnology is the ability totransfer segments of DNA from one organism toanother, resulting in transgenic varieties. Therange of commercial transgenic crop varieties isstill quite narrow (the majority feature herbicidetolerance or insect resistance), and about one-thirdof the global area planted to transgenic crops is indeveloping countries (the majority in Argentina,Brazil, China, India, and South Africa) (James2004). Nevertheless, a recent review demonstratesconsiderable progress in research capacity forgenetic transformation in the South (although con-centrated in relatively few countries), including arange of crops and characteristics well beyond cur-rent commercial offerings (Atanassov et al. 2004).A less publicized but equally important contribu-tion of biotechnology to plant breeding is the de-velopment of a range of tools and processes thatallow plant breeders to link particular functions tospecific genes or sequences of DNA and to tracktheir presence during the course of conventionalplant breeding. The genes and techniques used indeveloping transgenic crops, as well as the diag-nostic tools and processes of marker-assistedbreeding used to produce conventional plant vari-eties, are all candidates for patent protection (seeAppendix A).

National patent systems have been unable tokeep pace with the rapid development of plant

biotechnology, leaving many areas of uncertaintyand dispute. In developing countries, only a smallminority of patent offices have begun to considerapplications related to plant biotechnology, whilein several industrialized countries a number ofclaims to basic technologies are still the subjects ofcomplex court cases. It is therefore impossible tochart an unambiguous course for the developmentof effective IPR regimes for biotechnology, but it isimportant to recognize the major parameters and toidentify the issues that will affect IPR policy in thecoming years. Areas of particular concern includethe protection of genes and other sequences, themethods used for genetic transformation, informa-tion in bioinformatics databases, and the diagnostictechniques that biotechnology offers conventionalplant breeding.

IPRs for biotechnology thus present a complexset of issues that will challenge policy makers, re-searchers, and the commercial sector for manyyears to come. Developing countries need tostrengthen their capacity to understand the issuesand to develop appropriate policies regarding thepatentability of various biotechnologies and theirproducts in order to support domestic develop-ment of biotechnology and promote access to for-eign technologies.

If biotechnology is to contribute to poverty alle-viation and rural food security, a greater effortmust be made to place technologies in the publicdomain. The promotion by CAMBIA of an open-source model for biotechnology innovations is achallenging example. Although some importanttechnologies are in the public domain, most of thekey elements of plant biotechnology are controlledby a small number of MNCs. Important court casesare in progress to define the boundaries of some ofthese claims, but the results will merely assignrights to one firm or another, or result in furthercross-licensing that keeps most of the technology inthe hands of a few large firms.

Agricultural research in developing countriesneeds better access to this technology. Certainlythere are instances in which these firms are willingto provide humanitarian licenses for some of thetechnology; the example of “Golden Rice” is themost highly publicized case. Such licenses mayfocus on segmented markets (particular countriesor classes of farmers) and on public-private part-nerships in which NARIs can trade access to someof their own technology (Byerlee and Fischer 2002).One recent example is the PIPRA initiative of major



U.S. universities, foundations, and nonprofit re-search institutions to make agricultural technolo-gies more easily available for breeding varietiesof subsistence crops in the developing world,partly through humanitarian licensing. In addition,researchers can use technologies that are notpatented in their own countries without fear of im-mediate sanction from the patent holder, as long asthe products do not enter into international trade(Binenbaum et al. 2003). However, some argue thatsuch use could impede future negotiation of legiti-mate licensing agreements for new technologies.

In most cases, developing country researcherswill need to do a thorough FtO analysis to under-stand the ownership implications of the tools, ma-terials, or processes that contribute to a particularresearch project. The technology they use may have

been acquired through nonofficial channels, bymeans of an MTA that may allow only researchuse, or through commercial purchase that includesother types of contractual restrictions. As biotech-nology research in developing countries movesfrom theory to practice, an explicit understandingof the nature and implications of access to pro-tected technology becomes increasingly importantif products are to be delivered into farmers’ hands.

A point of equal importance is that nationalpatent offices must be prepared for a growingnumber of applications in plant biotechnology.They will have to define the types of claims thatmay apply for protection, given the details ofthe national law, and establish guidelines fordetermining the novelty of particular biotechnol-ogy inventions.

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THE WORLD BANK Intellectual Property Rights · 2016-07-15 · REPORT NO. 35517-GLB Intellectual Property Rights Designing Regimes to Support Plant Breeding in Developing Countries